Trading & Manufacturing Sale

[Ramesh M]

Dear Experts,

We are manufacture of Fire Fighting System and existing central excise registered, we received order from our customer to Design, Supply, Erection of Fire Fighting System as a single entity. For Supply 1 Cr and Erection 20 Lakhs mentioned seperately in the same purchase order.

We will manufacture core unit in our factory and balance 60% of material will be by in market as bought out component as per our design specification.

In view of above, i want to clarify from you

1) Can we despatch our bought out components directly from our vendor place to our customer (LikeTrading)

2) Is there any objection from Central Excise Department

3) Single order can we split into two i) Manufacturing Sales ii) Trading Sale

4) When i design the equipment, can i split into two type of sales

Ramesh M

[PAWAN KUMAR]

Dear Sir,

As per my view,

1.Goods can be directly supplied to your customer on your behalf by your vendor.

2.No objection from the central excise department. The goods supplied directly should not be identical with your manufacturing final products.

3.No, Only an composite order can be done which include component cost (Manufactured+bought out)+Erection charges.

4.No. only one type of sale is to be done.

[Mukund Thakkar]

Dear Rajesh,

1) Can we despatch our bought out components directly from our vendor place to our customer.

you can, but your customer may be asking you latter on for discount, your customer may be compare your project cost and supply of 60% items cost. so it is advisable to bring all supporting items (bought out items) at your place and sending along with your produced item. with the value addition.

2) Is there any objection from Central Excise Department.

no any objection if you are sending the goods directly from your vendor. but no cenvat credit is availed by you.

3) Single order can we split into two i) Manufacturing Sales ii) Trading Sale.

please refer your purchase order may be cost + excise+ vat/cst. single order how you split at your end.

[Mahir S]

Yes, both the above submissions appears to be correct.