Trading activity

595 views 2 replies

Ramesh

Manager

43 Points Joined July 2012

We are Manufacturer of Material Handing System Like Conveyors. We will get the orders from our clients as turnkey basis for the entire system. In this system we will manufacture some of the goods in semi finished condition as per our design in our factory premises, some of the goods bought out components (BOC) like motor, gear box and bearings we will buy various places in India as per our design specification. We are bringing BOC to our manufacturing unit, doing testing and sending to customer along with our semi finished product. In this process we are getting Cenvat Credit on BOC items and we are availing. At our client premises we will assemble all the components and commission the system.

In view of above process, 1) are we eligible to do trading activity for the BOC items (sending to customer directly from supplier place) ? 2) is there any complication from Excise, Service and Sales Tax 3) Whether we need to do any sort registration

Kindly sugguest.

Replies (2)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

BOC items are components to your supplied goods, and it ranks at par in manufacture, so the clearance value will inclde the gross clearance including BOC items, and duty payable on gross as your own manufacture. ( as you have availed cenvat credit on BOC items, duty is payable from zero level)

Anandan

HOD accounts

502 Points Joined June 2012

@ Ramesh... If you are using the BOC in manufacturing the end product on which you are paying excise duty, then you can avail the cenvat credit on your purchase of those material. But if you are buying the BOC and selling it "As Such" then you will have to reverse the entire modvat credit if at all you have availed the same. This will be raised in during your Excise Audit. The correct procedure is to take two different ECC no one as dealer and one as manufacturer. You source all materials under the Dealer no and you can sell the products required by your mfg unit and pass on the credit to mfg units. Also the dealer. can sell the BOC to other parties as such and pass on the modvat credit.

This will avoid all the unwanted tension and litigations with excise dept.

Thanks & Regards

anandan.s