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Excise Registeration for a New Manf. Business

kamlesh s (Partner) (41 Points)

16 February 2011  

Hello ,

 

We are about to start a new corrugated box manufacturing unit in Bangalore.

We have registered as an SSI, also registered PAN,TAN, VAT,CST, KS&CE certificates.

We are waiting for our machines to arrive.

No material has been purchased or sold.

We have a copy of our customers purchase order(sample copy)

In their payment they have addes Basic Excise Duty-BED(4%) + Education Cess (2%) + S Cess(1%)+ VAT(5%)

Now from what I have read we don't need to register till we cross 1.4-1.5C turnover (Which we will within 5 months)

But we will not cross 400 lac limit in any year.

So what should the process be like ?

Do we start collecting the BED only after we cross 1.5C or do we keep collecting it throughout?

I'm an engineer and I don't know much about accounting as you can see. :)

Please let me know if you need any more information.


Thank you

 


 13 Replies

Amit Prakash Singh (Accountant) (295 Points)
Replied 16 February 2011

 

Provisions of General SSI exemption

Exemption Notification for SSI

SSI are eligible for exemption from duty under Notification No. 8/2003-CE dated 1-3-2003. The SSI unit need not be registered with any authority

Eligibility for SSI concession

Unit whose turnover was less that Rs 4 crores in previous year are entitled to full exemption upto Rs 150 lakhs in current financial year. SSI unit can avail Cenvat credit on inputs and input services only after it starts paying duty. However, Cenvat credit of capital goods can be availed even if these were received during period of exemption.

Articles eligible for SSI exemption

Broadly, items generally manufactured by SSI (except in tobacco, matches and textile sector) are eligible for SSI exemption. Some items like pan masala, matches, watches, tobacco products, Power driven pumps for water not confirming to BIS, products covered under compounded levy scheme etc. are specifically excluded, even when these can be manufactured by SSI. Some items like automobiles, primary iron and steel etc. are not eligible for SSI exemption, but anyway, these are beyond capacity of SSI unit to manufacture.

SSI unit manufacturing goods with other’s brand name not eligible for exemption

Goods manufactured by an SSI unit with brand name of others are not eligible for SSI concession, unless goods are manufactured in a rural area. However, SSI exemption will be available to packing material even if it bears brand name of other person.

Mode of calculation of limit of Rs 150 lakhs/Rs 400 lakhs

While calculating limit of Rs 400/150 lakhs – (a) Turnover of Exports, deemed exports, turnover of non-excisable goods, goods manufactured with other’s brand name and cleared on full payment of duty, job work done under notification No. 214/86-CE, 83/94-CE and 84/94-CE, processing not amounting to manufacture and traded goods is to be excluded (b) Value of intermediate products (when final product is exempt under notification other than SSI exemption notification), branded goods manufactured in rural area and cleared without payment of duty, export to Nepal and Bhutan and goods cleared on payment of duty is to be included (c) Value of turnover of goods exempted under notification (other than SSI exemption notification or job work exemption notification) is to be included for purpose of limit of Rs 400 lakhs, but excluded for limit of Rs 150 lakhs.

Procedural relaxations

SSI units eligible for SSI concession are required to pay duty on quarterly basis and file quarterly return even if they do not avail the SSI exemption

Turnover of all units of same manufacturer to be clubbed

Turnover of all units belonging to a manufacturer will be clubbed for calculating SSI exemption limit.

Clubbing if two units belonging to different firms/companies are apparently separate but are one in reality

If two SSI units are genuinely independent, they are eligible for SSI exemption, even if some or even most partners/directors are common. Financial control, flow back of profits and unity of interest are the major tests to determine whether turnover of two units is required to be clubbed.

1 Like

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory)   (861 Points)
Replied 16 February 2011

Hi,

 

You need not charge excise duty till the time you reach limit of 150 lakhs and also need not register under central excise.

But the moment you reach turnover of 90 lakhs then you need to give intimation to the department.

If you start collecting the excise duty from your customers then you will become liable to take the registration and deposit the the duty collected to the department along with filing of the prescribed returns.

 

Regards

 jeevesh @ mavenlegal.net

1 Like

kamlesh s (Partner) (41 Points)
Replied 16 February 2011

Thank you Jeevesh and Amit.


@ Amit : As I said before I'm clueless about accounts and taxes.


@ Jeevesh : Thank you. I got the point.

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 17 February 2011

ask the buyer 1st, if they are ready to accept excise free goods then avail exemption of 1.5 cr, otherwise start paying from 1st clearence and take cenvat input credit  by taking CE registration number, here u can get cenvat credit on machines purchase also if the duty is paid on capital goods. 

1 Like

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 17 February 2011

Get registered under Central Excise through ACES as soon as you commence production. Avail exemption up to Rs 150 lakhs . While availing exemption you cannot collect duty. Take CENVAT credit of capital goods ,50% first year and balance in second year. File ER-3 quarterely and claim cenvat on capital goods. After crossing Rs.150 lakhs start paying duty and start availing cenvta credit on inputs as well. Registration is not compulsory while availing the basic exemption, but it is advised for avaling cenvat on capital goods.

1 Like

kamlesh s (Partner) (41 Points)
Replied 17 February 2011

Thank you U S Sharmaji and Unnikrishnanji .

Can you tell me what all comes under Capital Goods.

My Machinery Invoice does not have any excise or CENVAT. (It has CST)

Is there any good box which can guide about the various Taxes and Registrations involved in manufacturing business.

I'm really weak at all these concepts. :)

Please guide me.

 

This link seems like good source of information. Though I don't understand some.

https://www.cbec.gov.in/excise/cx-cenvat-rules.htm

 


Thank you.

 

 

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 17 February 2011

Originally posted by : kamlesh s


Thank you U S Sharmaji and Unnikrishnanji .

Can you tell me what all comes under Capital Goods.

- Plant & Machinery, Jigs and Moulds, Tools & Impliments , used directly in or in relation to production of taxable finish products.

My Machinery Invoice does not have any excise or CENVAT. (It has CST)

- The Machine is supplied by either a dealer or a manufacturer who is under 150 lacs of excise clearance.

Is there any good box which can guide about the various Taxes and Registrations involved in manufacturing business.

- When we manufacture , excise is leviable , option a) avail exemption upto 150 Lacs without input credit of duty paid on raw materials ( inputs) or b) pay duty from start and with input credit of duty paid on raw materials.( duty payable at time of clearence from factory, it may be or may not be sale)

- When we sale , VAT is payable, u can take input credit of vat paid ( not the CST)

- When u provide service ( any kind)/ receive Goods Transport Agency Services (without service tax payment), then you have to pay service tax.

- Profession Tax a) Enrollment for your company / directors b) registration for your employees salary deduction .

- Income tax - on the net income made on the business throughout the year. 


I'm really weak at all these concepts. :)

Please guide me.

 

This link seems like good source of information. Though I don't understand some.

https://www.cbec.gov.in/excise/cx-cenvat-rules.htm

 


Thank you.

 

 

you can post the queries, CCI members are always in arms reach of you 

1 Like

Sanjay Dwivedi (Advocate & Consultant) (143 Points)
Replied 17 February 2011

1. You have a choice - whether to avail exemption upto Rs. 1.5 Crores or not. Whenever you start paying duty, you also start getting Cenvat Credit of the duty paid on inputs and also of the service tax paid on 'input services'. Credit against Capital Goods can be accumulated even while you are availing exemption (as clarified by Mr. Unnikrishnan Nair).

2. It is profitable to avail Cenvat Credit and charge duty to customers. In very simplistic model, the amount of additional profit is equal to the amount of Cenvat Credit that you can earn.

3. Whether to avail exemption or to start paying duty? You should take a decision on the basis of - whether most of your customers would be interested in availing Cenvat Credit? If yes, then if you start paying duty you also start getting credits.

4. If you get registered with the department, there would be a cost of compliance in form of engaging staff, consultant. You would also have to handle demands from the officers of the department.

1 Like

kamlesh s (Partner) (41 Points)
Replied 18 February 2011

Thank you for the reply sir.

 

4. If you get registered with the department, there would be a cost of compliance in form of engaging staff, consultant. You would also have to handle demands from the officers of the department.

This is my worry. Bangalore is full of demanding officers and their wishlist.

As I'm new into business and specially manufacturing I'm unsure of being able to handle so much so soon.

But I'm guessing once i'm in it I'll gain confidence and should know how to tackle such issues.

That's one reason why I'm avoiding this registration.


Thank you for your assistance.

 

Just found out about the weights and measurement department.


is there a checklist of all the registrations one needs for various business?

I have done the following so far.


1. Partnership Deed

2. Lease Agreement

3. Firm PAN and TAN

4.CST

5.VAT

6.Karntaka shop and commercial Establishment.

7.MSME Certificate.

8.Bank Account

9.Professional Tax

10.Transit Insurance for Machines

I will eventually get PF and Excise registration too

Can you please tell me what other registrations are left?

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 18 February 2011

if you have taken preventive measures and maintaining records as per rules, then no department can make trouble to you, but if the day to day paper work is pending, then no department will release you. 

 

excise is nothing but maintance day to day records and submission of the returns and records at time ( now its 100 times better after formation of ACES)

Right now u have to apply for "NOC" from pollution department" and after production , u have to get "Consent to Operate"

kamlesh s (Partner) (41 Points)
Replied 18 February 2011

Thank you Sir.

 

I will go find out about NOC from Pollution Control and get it ASAP.

kamlesh s (Partner) (41 Points)
Replied 19 February 2011

Hello,

 

Our unit has not yet started, our machines are yet to arrive. (VAT not applicable)

We have registered for VAT already.

Do we need to do anything before the 20th?

Basically nothing has been done apart from all kinds of registrations.

SP (Head _ Finance) (31 Points)
Replied 04 January 2014

Hi Group,

Can anyone advise me on the following Query Pls.

There is a Partnership Firm doing manufacturing activity for the last 4 - 5 years under SSI.

Last year they have made a sales of Rs.220 Lacs of Sales, in which Rs.177 Lacs Sales under Form H (Deemed Exports) & Rs. 43 Lacs under Form C.

Current year they have made a total sales of Rs. 217 Lacs upto Dec 13, in which Deemed Exports is Rs. 212 Lacs and balance 5 Lacs under CST Sales.

Is it required to take Excise Registration, since the sales turnover has been increased more than Rs.150 Lacs Sales.  Can anyone please suggest shall we proceed to take the registration or since the goods are sold for Exports, still the company falls under SSI, so excise registration is not required.

Please advise.

Param

 

 


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