Trading activities

[ASHOK AMIN]

We are in manufacturing of chemicals and hold central excise registration. We also undertake trading activities in chemicals. We are in short of space for trading activities, so we are planning to shift trading in our manufacturing premises where we have ample space, with proper separate entrance and documentation. The trading activities will not be under excise. Kindly guide us in this matter and suggest a remedy with proper and valid answer.

[MUKUND THAKKAR]

Dear Ashok ,

you can carried trading activity based on following views.

1. Amendment your existence central excise registration, what ever space you have require for trading please reduce the area from your current registration,

2. separate entry gate and covered the area with the compound wall.

3. if you are owner of the entire space. please make legal rent agreement with your trading firm.

4.if your trading firm name is different from your existence manufacturing company than not any major issue.

5. please keep in mind that if you are going to take excise registration under trading activity. dept will not issue any registration.

[ASHOK AMIN]

Thanks for your prompt reply. One more question, please tell us whether we require to take permission from the Commissioner of Central Excise.

[MUKUND THAKKAR]

Dear Ashok,

what ever amendment you are doing in your registration, it should be done thru ACES, (on line) than your respected Division office ask your range office for verification of changes. and your range office will submitted the report to your division office. so need not take any permission, just change the area in your existence registration and intimate your division office and range office.

[ASHOK AMIN]

Ok. Thanks for your prompt reply. There is a confusion in point no 3 of your reply. You said that "if you are owner of the entire space, please make legal rent agreement with your trading firm". Sir here i would like to inform you that the owner is same for the trading activity also. So where does the question of legal rent agreement appears here. Secondly, I would like to bring to your kind attention regarding the Trade Notice No.553/63/2001 dt: 29.11.2001 wherein it is clearly mentioned that if we want to do trading activities which are identical to the manufactured goods than permission should be obtained from the Commissioner of Central Excise with proper procedures and abide with the rules and regulations involved in it. Please clarify in this matter since this is a very sensitive revenue matter.

[ASHOK AMIN]

Thank you sir.

[Lekh Sood]

Hello Ashok,

I agree with you that no such agreement is required. Also in the Excise Rules there is no such procedure for trading in even identical goods. The circular referred by you though mentions of permission from commissioner , it is not mandatory in rules.

So for the proper separate storage and accounting and documentation is maintained there should not be a problem.

By an abundant caution the letter mentioning this fact should be submitted along with revised ground plan. You may wait for sometime to excise authorities to respond.

[ASHOK AMIN]

Thank you, Mr. Lekh Sood for your valuable information. I am aware that there is no such rules in excise that we cant do trading in identical items. But, to safeguard the revenue there are various circulars and instructions from the department which clearly highlights that we cant do trading activities in the manufacturing premises with identical items. Secondly, we have to wait for their response means it is clear that we have to get their permission. Without their official visit in the factory premises it is impossible for us to carry on the trading activities by just only submitting the amended registration and revised ground plan thereafter.

[Mahir S]

Sir,

A manufacturer may bring duty paid goods in the registered manufacturing premises for trading purpose and no permission in this regard is warranted from the Central Excise Department. However, a factory cannot be allowed to receive goods from outside, which are identical to those manufactured by them for which proper permission from the Commissioner is required.

[ASHOK AMIN]

Thanks Mr. Naved

AI Summary

Trading activities from manufacturing premises require registration amendment and segregation; identical goods may trigger Commissioner permission.
Whether a manufacturer may carry out trading activities from manufacturing premises requires segregation of the trading area, separate documentation, and amendment of Central Excise registration via ACES, with division and range office verification. Where traded goods are identical to those manufactured, departmental guidance advises caution and some practitioners recommend obtaining the Commissioner's permission, though views differ on its mandatory legal requirement.