LOAN LICENSE

[VAISHALI JOHSI]

Dear All,

I need detailed excise procedure for the following business model:

Company XYZ manufacture their product on loan license basis at premises of Company ABC

ABC buys the complete raw material and packaging material for XYZ on their name

XYZ needs to take the finished goods delivery to their Warehouse and cut the Excise gate pass on their name only.

Is stock Transfer procedure in this case is valid

Please advice correct excise procedure

AI Summary

Excise Procedure Clarified: Determining Manufacturer in Loan License Arrangements Under CBEC Guidelines and Board Circulars A query was raised about the excise procedure for a business model where Company XYZ manufactures products on a loan license basis at Company ABC's premises. ABC purchases all raw and packaging materials, while XYZ takes delivery of finished goods to their warehouse, issuing the excise gate pass in their name. The response clarified that the determination of the manufacturer depends on the agreement's terms. If it is a principal-to-principal relationship, ABC is considered the manufacturer, making the stock transfer procedure valid. Relevant procedures and guidelines are provided in CBEC's Supplementary Manual and specific Board Circulars.