Applicability of excise on pulverisation of sugar

[Uttam Jain]

Whether pulverization of sugar amounts to manufacture?
One dealer who is purchasing sugar from manufacturer who is charging excise duty and cess on his sales bill..and dealer is pulverising sugar and packing in the size of 50 and 100kg packs under its own brand and then selling it to other party who's using the same for making cookies and confectionery.
If we want to passed on the excise whether he needs to take registration as a first stage dealer?
And if he is taking registration as a manufacturer then what will be the rate of duty on pulverised sugar..
Please suggest..

[Rajagopalan Ranganathan]

Sir,

1) Pulverization of duty paid sugar does not amount to manufacture. Therefore you need not pay any duty on pulverized sugar.

2) You are required to register yourself as first stage dealer only when you want to pass on the duty paid on sugar as credit to your customer. Otherwise the registration is not necessary.

In view of my reply to your query 1 answer to your 3rd query is Nil

[KASTURI SETHI]

Sh.Uttam Jain Ji,

I fully agree with the reply of Sh.Rajagopalan Ranganathan, Sir. No new product emerges as a result of process of pulverization. Hence this process does not amount to manufacture under Section 2 (f) of Central Excise Act. For passing on Cenvat Credit, registration is required under Rule 9 of Central Excise Rules, 2002

[KASTURI SETHI]

This is in continuation of my reply dated 3.3.2016.

Pulverized sugar is also refined sugar. Refined sugar remains refined sugar even after the process of pulverisation. This process does not change the essential characteristics of refined sugar. BURA CHINI is entirely different from refined sugar. To have more clarification, you may go through Board's Circular No. 879/17/2008-CX.1 (Order under Section 37B), dated 5-12-2008

[Uttam Jain]

Thank u so much for your valuable feedback sir.

I would like to draw your attenntion on few more points

1.As per defination of deemed manufacturing,packing or repacking or labelling or relabelling would amount to manufacturing, still he is liable to register as a first stage dealer

2 In case dealer is printing MRP on the packets removing from the factory whether he would be liable to pay excise duty on the MRP printed on the packets removed from the factory and liable to register as a manufacturer.

Please suggest as your suggestion are important to me.

Thank you in anticipation.

[KASTURI SETHI]

Sh.Uttam Jain Ji,

1. If any dealer wants to pass on Cenvat Credit to its buyer, then he is required to obtain Registration Certificate. If you are registered as a manufacturer (Whether deemed or otherwise) of excisable goods, you would naturally pass on the cenvat credit to your buyer at the time of clearance from the factory. Where is requirement of being registered as first stage dealer ? However, if you want to clear the goods on stock-transfer basis to your depot, depot has to be got registered with the Central Excise Department. From the depot any person can purchase the goods whether the buyer intends to avail Cenvat Credit or not ?

2. As per Section 2 (f)(iii) of Central Excise Act, any activity or any treatment on the products which render them marketable, is a manufacturing process.Hence affixing of MRP is a manufacturing process. Pl. note that a dealer is not supposed to do this activity. It is required to be done by a manufacturer of excisable goods in his factory.

3. Only a few goods of Chapter 17 have been covered in "Third Schedule" meant for a deemed manufacturer.

AI Summary

Manufacture: pulverisation of refined sugar is not manufacture; registration only required to pass on Cenvat credit. Pulverisation of duty-paid refined sugar that does not alter its essential character is not manufacture and does not attract excise. Registration as a first stage dealer or as a manufacturer is required only if the dealer intends to pass on Cenvat credit. Activities that render goods marketable, such as affixing MRP, are treated as manufacturing processes and are expected to be performed by the manufacturer in the factory; deemed manufacture rules apply to limited goods in the Third Schedule.