Possibility of despatch of finished goods without bringing to the factory

[G GOSWAMI]

I put this issue before the respected wise forum to have their kind opinion.

Factory A wants to procure order from their customer and to get it manufactured from their another division B at different state. To save freight charge and time A wants to dispatch the said finished goods to their customer or export directly from B factory without bringing it to the factory of A . In this case B will stock transfer the said goods to A raising invoice with payment of excise duty and without payment of sales tax. A will raise invoice to their customer as per the contract price with payment of appropriate duty and sales tax.Whether this transaction is possible keeping in mind the availability of cenvat credit, maintenance of DSA/ER-1, central excise sealing & supervision of export consignment and other relevant legal provisions.Kindly suggest any suitable legal wayout for this transaction or express your views in the matter.

Regards,

G.Goswami

25.11.2015

AI Summary

Factory A Plans Direct Shipping from Division B to Cut Costs; Evaluates Tax Implications and Legal Feasibility. Factory A seeks to fulfill customer orders by having goods manufactured at its division B in another state and dispatching them directly from B to the customer, bypassing A to save on freight costs and time. The plan involves B transferring goods to A with excise duty but no sales tax, and A invoicing the customer with appropriate duties and taxes. Concerns include potential double taxation and the availability of CENVAT credit. A forum member suggests invoicing directly from B to avoid double excise duty and reduce taxes. A seeks further advice on the legal feasibility of this arrangement.