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Sale of Raw material

Suhas Deshmukh (Manager Finance & Accounts) (132 Points)

12 February 2011

Dear All

Ours is autoancilary manufacturing company used to purchase components from one supplier. Can we sale the raw material required by the supplier by purchasing it from other supplier as it cost cheaper to us? Can we gain some profit on it? What will be the Excise/Income tax implications?.

What will be the nature of transction ? Jobwork or pure Sale & Purchase

Thanks in advance

Suhas Deshmukh

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9 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 12 February 2011

I am of the opinion you can do it since it is a Trading Stock for You and you should not take Excise Credit and VAT Credit for the same

Pankaj Arora (Learner) (3134 Points)
Replied 12 February 2011

You will be first stage excise dealer. You could take input credit of excise from manufacturer or pass your liability to further consumer.

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 12 February 2011

Mr Pankaj how can they take credit since not used for manufacture they buy raw material and sell as it is with profit to another consumer ? clarify please

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 February 2011

Originally posted by : Suhas Deshmukh
	Dear All Ours is autoancilary manufacturing company used to purchase components from one supplier. Can we sale the raw material required by the supplier by purchasing it from other supplier as it cost cheaper to us? Can we gain some profit on it? What will be the Excise/Income tax implications?. What will be the nature of transction ? Jobwork or pure Sale & Purchase Thanks in advance Suhas Deshmukh

1) you can do it by entering in RG23A-Part1 for stock input and credit in RG23A-Part2, on clearance u have to clear the same from RG23A-Part 1 for stock and reversing the duty credit taken from RG23A part 2

2) you have to obtain dealer registration and trade the goods with RG23D, without taking input credit, ( here u can add your profit and other expenses)

1 Like

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 12 February 2011

Originally posted by : U S Sharma
	Originally posted by : Suhas Deshmukh Dear All Ours is autoancilary manufacturing company used to purchase components from one supplier. Can we sale the raw material required by the supplier by purchasing it from other supplier as it cost cheaper to us? Can we gain some profit on it? What will be the Excise/Income tax implications?. What will be the nature of transction ? Jobwork or pure Sale & Purchase Thanks in advance Suhas Deshmukh 1) you can do it by entering in RG23A-Part1 for stock input and credit in RG23A-Part2, on clearance u have to clear the same from RG23A-Part 1 for stock and reversing the duty credit taken from RG23A part 2 OR 2) you have to obtain dealer registration and trade the goods with RG23D, without taking input credit, ( here u can add your profit and other expenses)

Wonderful Explanation

soni chauhan (Service) (670 Points)
Replied 16 February 2011

Yes ........raw material can be sale as such removal or through trading.......Mr.sharma is very right.

CHANDRA (Manager-Accounts) (26 Points)
Replied 15 June 2012

Originally posted by : sivaram
	Originally posted by : U S Sharma Originally posted by : Suhas Deshmukh Dear All Ours is autoancilary manufacturing company used to purchase components from one supplier. Can we sale the raw material required by the supplier by purchasing it from other supplier as it cost cheaper to us? Can we gain some profit on it? What will be the Excise/Income tax implications?. What will be the nature of transction ? Jobwork or pure Sale & Purchase Thanks in advance Suhas Deshmukh 1) you can do it by entering in RG23A-Part1 for stock input and credit in RG23A-Part2, on clearance u have to clear the same from RG23A-Part 1 for stock and reversing the duty credit taken from RG23A part 2 OR 2) you have to obtain dealer registration and trade the goods with RG23D, without taking input credit, ( here u can add your profit and other expenses) Wonderful Explanation

Dear All, Which section or rules permit for the regular sale of excisable raw materials? Rule 16A of the Central Excise Rules 2002 deals only with the removal of goods as such to JOB WORKER for further PROCESSING etc subject to fulfillment of conditions specified by the COMMISSIONER. If some other rules or notifications or sections provideds for the sale of raw material pls mention or else these will only be a disputable or debatable matter forever.

Thanx

CHANDRA (Manager-Accounts) (26 Points)
Replied 15 June 2012

Originally posted by : sivaram
	Originally posted by : U S Sharma Originally posted by : Suhas Deshmukh Dear All Ours is autoancilary manufacturing company used to purchase components from one supplier. Can we sale the raw material required by the supplier by purchasing it from other supplier as it cost cheaper to us? Can we gain some profit on it? What will be the Excise/Income tax implications?. What will be the nature of transction ? Jobwork or pure Sale & Purchase Thanks in advance Suhas Deshmukh 1) you can do it by entering in RG23A-Part1 for stock input and credit in RG23A-Part2, on clearance u have to clear the same from RG23A-Part 1 for stock and reversing the duty credit taken from RG23A part 2 OR 2) you have to obtain dealer registration and trade the goods with RG23D, without taking input credit, ( here u can add your profit and other expenses) Wonderful Explanation

Thanx

PKumar (Service) (51 Points)
Replied 06 February 2014

You can do do it accordingly cenvat credit rule 3(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9: