Trading or removal as such

[Dalia Felix]

Hai, how can we distinguish between removal as such and trading by a manufacturer in excise? What are the criteria used? Any clarification issued by CBEC in this regard?

[Mehul Pandya]

Separate Registration required for manufacturer, Dealer and Importer. Normal Trading activity should be followed under Dealer / Importer Registration. Where as raw material purchased for manufacturing purpose is not up to the mark or purchase return or sold to any other buyer will be called as Removed As such on which cenvat credit availed. Hence cenvat should be reversed under Rule 3(5) of CCR Rules. You may also refer Rule - 9 of Central Excise Rules, 2002.

[Arun Kumar Singh]

You should maintain the separate account for as such removal and trading activity. As such removal of goods will be return to the same unit and trading activity is different from as such removal.

AI Summary

Removal as such: manufacturers must reverse cenvat when goods are disposed as such rather than treated as trading.
Distinction between removal as such and trading depends on the nature and destination of goods: returns to the same unit or sale of unmanufactured or unsatisfactory raw materials constitute removal as such, while routine resale to third parties is trading. Separate registration and separate accounts must be maintained for manufacturer, dealer and importer functions. Where cenvat credit was availed on goods treated as removal as such, the cenvat must be reversed under the applicable cenvat credit reversal rule.