Trading Activity

[Laxmaiah Vanamamula]

Dear sir,

we have Manufuturing unit, we have purchased  some CPVC Fittings (boughtout)  with Tax invoice

we sold above materials to customers(same fittings)

we ( our company) eligible to deal this Trading activity ? (can we take any permission or registration from Excise  Dept), please clarify

 Thanking you

[YAGAY and SUN]

Yes, if you intent to pass on the CENVAT credit , then it is required. However, it is always be safer side to inform the Concerned Authority in advance about the activities you intend to indulge your self.

[KIRTIKUMAR PUROHIT]

Earlier Reply in respect of Trading of Duty paid Input intend to sale in register premises but Reg. Manufacturer intend to trad non cenvatable goods than Earlier, permission was required to trade from the manufacturing premises. Now no such permission is required. Under common law system, everything is allowed unless until it is prohibited by law. Whatever has not been prohibited by law is permissible in law. There is no law prohibiting you from trading from manufacturing premises. Thus trading for manufacturing premise is permissible. However I would like to invite kind attention to the provision of T. N. No. 128/2003  In  Para 2 of the T. N. that a manufacture can bring duty paid goods for trading in his factory without the permission of the Central Excise Department provided that similar or identical goods are not manufactured in his own factory. I hope you got your solution from this answer.

[Vinay Sharma]

Mr. Kirthi Kumar Purohit,

Trading is permissible o .k. but the important question is the excise duty charged on such trading invoice, will the CENVAT credit be available to the buyer who purchases goods from us. In other words, can we pass on CENVAT Credit on a Trading Invoice when we are not Registered as Trader in Excise Department ? 

One more question related to this is that we are Manufacturing autoparts for Automobile Manufacturers. We buy certain Bought Out Parts (BOPs) which are fitted into auto parts manufactured by us. At times Automobile manufactures ask us to provide these BOPs also. We raise invoice for these BOPs and pass on CENVAT credit. Is this in order if we are not registered as trader in view fact that supplying BOPs in not our main business but we have do it because of business compulsion.

I will be happy is Mr. Khatri Also posts his comments on this.

Regards

 

[KIRTIKUMAR PUROHIT]

First, You can not pass cenvat on BOPs without Registration As a Dealer,

Second, When you are use BOPs as a componant of other Goods; this activities amount to manufacture thus said goods value considared in total turnover.

AI Summary

CENVAT credit: passing credit on traded bought out goods requires dealer registration; trading from factory has conditional rules.
A manufacturer may trade duty paid bought out goods from factory premises without prior permission where identical goods are not manufactured in house, but must inform the excise authority. Passing on CENVAT credit on such trading invoices requires dealer registration. Bought out parts incorporated into manufactured goods are treated as part of the manufacture and their value is includible in total turnover, affecting excise accounting and credit treatment.