Shrink Wrap Compliances

[Tej Anand]

Good Afternoon ,

I would like to have your comments on the below mentioned subject :

 

Suppose there is a company in India which imports mobiles from China . The mobiles received from China are in mother boxes and in mother boxes there are say suppose 20 mobile boxes . 

Once these are imported from China and we receive them in India we open these mother boxes and each mobile box is shrink wrapped and then the same is put once again in mother boxes and sent to different warehouses in India from main warehouse .

Can you please let us know if there is any tax implication and view point from the Factory Act or any other act applies to this . Also let us know if we need any licence / permission / Registration .

The above company in India is just importing from China and then reselling in India .

Request you to kindly comment on the same and give us your kind views.

Thanks & Best Regards

Tej Anand

 

[Radha Arun]

In terms of sec 2(f) of the central Excise Act, read with the third schedule thereto, adoption of any treatment on the goods to render them marketable to the consumer is deemed to be manufacture.

It could be argued that shrink wrapping is not a 'treatment'; but there can be different views on this. One can expect litigation.

AI Summary

Deemed manufacture by post-import processing may arise where shrink wrapping renders goods marketable, creating excise liability.
Shrink wrapping of imported mobile handsets after arrival may be treated as deemed manufacture if the post import treatment renders the goods marketable, potentially attracting excise characterisation and related tax obligations; competing views treat shrink wrapping as mere packaging, leaving scope for litigation and attendant regulatory consequences such as registration or compliance if classified as manufacturing activity.