EXCISE ON TRADING GOODS

[Rajeev Khulbe]

Sir,

Good morning to all my favourite experts, Sir we are excisable manufacturing unit. Sir now we want to trading some goods ( Finished Goods & Raw Material). Sir in this regards will we take another registration or please help me.

[Suryanarayana Sathineni]

Dear Friend,

There is no specific requirement to take a Separate Registration for Trading provided, you are able to maintain separate accounts for manufacture and traded goods with documents.

However, if you want to issue cenvatable invoices passing the duty paid by the original manufacturers to the customers, then the trading facility must be Registered under Central Excise as a Dealer.

Best Regards

Suryanarayana

[Rajeev Khulbe]

THEN SIR CAN WE TAKE ANOTHER REGISTRATION AS DEALER UNDER EXCISE . WHILE I HAVE ALREADY EXCISE NO. AS MANUFACTURER

[KASTURI SETHI]

Sh.Khulbe Ji,

You cannot do trading of the goods being manufactured by you from your manufacturing premises.As per law get your depot registered for this purpose.If you want to do trading of even identical goods permission from Commissioner is required.Better option is to get registered as depot. Similarly no trading is allowed in respect of inputs. Only input removal as such is allowed on the ground of quality rejection or some other reason.Input removal as such is not trading.

[DR.MARIAPPAN GOVINDARAJAN]

Not a clear picture is there in this case.

[Suryanarayana Sathineni]

Dear friend,

As a manufacturer, you cannot carryout trading of your own manufacturing goods. With respect to Raw materials (inputs), you have only option to clear them as such under cenvat provisions since you have availed cenvat credit. Hence the views expressed by Shri. Kasturi Sethi Ji are correct.

Further, as stated, there is no problem in your purchasing goods including Raw materials from other manufacturers for trading purposes and to issue cenvatable invoices, you must obtain a dealer registration from CEX in addition to your existing manufacturer's Registration.

Further, Trading activity being exempted service, you may have to take care of cenvat availment of input services used for trading activity in terms of Rule 6 of Cenvat Credit Rules which is no doubt cumbersome.

Best Regards

Suryanarayana

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sirs,

Trading of goods would amount sales of goods. For this purpose they have to register with VAT authorities. Whether I am correct? if not please correct me.

[KASTURI SETHI]

I am thankful to Sh.Surya Narayana, Sir for elaborating the views expressed in my reply. I am also of the view that Sh.M. Govindarajan, Sir is 100% correct. The querist wants to do trading of inputs and finished goods from manufacturing premises. Dealer's premises/Depot premises are meant for trading and not manufacturing premises There is provision in Central Excise law for separate registration for manufacturing and dealer.

[Ganeshan Kalyani]

Sir VAT will be applicable on traded goods. But can he bring those purchased goods in factory for stocking till he gets any sale order. Or as said by Sri Kasturi Sir the depot should be registered as trader. I think this is feasible. Please share your views. Thanks.

[Suryanarayana Sathineni]

Dear Kalyan Ji,

In my view,

A manufacturer who intends to carry out Trading activity in his addition to his manufactured goods, he has to necessarily take a separate registration either in a seperate premises or in the manufacturing premises clearly demarcating the place meant for such trading if he intends to issue cenvatable invoices to pass on the duty paid on the traded goods to the ultimate customer. Other wise, he nee not required to take any registration from central excise but need to maintain separate records for trading and manufacturing goods .

Further, in general understanding A depot meant for receiving duty paid goods from its manufacturing facilities and sell to different customsers. A dealer, is who deals in purchase and sale of various goods who can purchase goods from manufacturers or their Depots and also from another dealer. Further, there is no bar in central Excise that A depot cannot deal with the goods other than the goods received from its manufacturing facility. Surprisingly, the procedure for getting Registration for Depot or Dealer/Trader is same and the registration No. will be allotted by the Department as XD 001 02 002 after PAN number. For manufacturers the code being used is XM 001 or 002 as the cae may be.

For carrying out trading activity as already stated by our friends, VAT/CST Registration is required and in this case , no separate registration is required as in the capacity of manufacturer he might have already taken such registration on its HO name as a Tax Dealer which is the nomenclature used in the VAT/CST.

Hope the above clarifies your query.

Best Regards

Suryanarayana

[Ganeshan Kalyani]

Sir the concept is now clear. Thanks a lot Sri Surya Sir.

AI Summary

Separate Registration Not Needed If Accounts Are Separate; Cenvatable Invoices Require Dealer Registration Under Central Excise. An excisable manufacturing unit inquired about the necessity of separate registration for trading finished goods and raw materials. Experts clarified that separate registration is not required if separate accounts for manufacturing and trading are maintained. However, to issue cenvatable invoices, registration as a dealer under Central Excise is necessary. Trading from manufacturing premises is not allowed; a depot must be registered for this purpose. VAT registration is required for trading activities. The discussion emphasized the need for clear demarcation of trading and manufacturing activities and proper registration to comply with Central Excise and VAT regulations.