Transfer of Funds From Excisable firm to Non excisable firm

[mantra bishnoi]

We have a manufacturing partnership firm A (covered under excise) and firm B manufacturing same goods in a nearby location with almost same partners but not covered under excise.

I have in the past withdrawn cash from Bank Account of Firm A and deposited to firm B's bank account and used the same in purchase of goods for firm B. This was done a couple of years back in financial year 2014-15.

I was recently told by someone that this action can make my firm B liable to be under Excise Duty and pay excise on goods sold since the transfer was done. Is that so ?

Please respond asap.

Thanks

Mantra B

[KASTURI SETHI]

You have done nothing wrong. Duty cannot be demanded with out any basis.

AI Summary

Excise liability not triggered by mere transfer of funds between firms; duty cannot be demanded without factual basis. The past transfer of funds from an excisable manufacturing partnership to a non excisable partner firm and use of those funds to purchase goods does not, by itself, create liability to excise duty; absent a legal or evidentiary basis connecting the transfer to an excisable activity, duty cannot be demanded.