PVC film sheets, Central Excise

[ASHOK AMIN]

Dear Experts,

We are in manufacturing of electroplating chemicals and equipment (engineering goods) We are having four plots in the same compound and it is registered under excise. From the four plot one of the plot is for manufacturing of engineering goods. Secondly, one of the plot from the four plots have an adjoined plot which is having entrance from the other side where we undertake trading activities and it is not registered under excise since more than a decade. Informed excise department as well. We import goods like electrophoretic chemicals, pvc film sheets and sell it to customers as it is. Now, we want to shift our trading activities at the engineering manufacturing unit due to shortage of space.

Our querry is ;

1) can we conduct trading activities from the engineering plot,

2) further our customer requires cenvat credit on pvc films, so, we decided not to shift the pvc films activities to the new place but, instead take dealers registration at the current trading plot and follow the excise procedures can we do that, and,

3) will the customer come to know of our import price of pvc films if we raise dealers invoice, if yes than what are measures we should follow in order to safeguard our import price.

We are very much in need of a solution for the above query. Request to all the experts to guide us in this matter as soon as possible.

Posts / Replies

[KASTURI SETHI]

Dear Ashok Amin Ji,

You want to deal in trading for passing cenvat credit to your buyers. A separate registration is required for this. Two registrations for the same premises as a manufacturer and as a trader (dealer) cannot be granted. As you have expressed, you may a new registration as a dealer from adjoining premises/plot. The department does not allow trading from the premises registered for manufacturing. However, special permission from the Commissioner is required if the goods to be traded are identical to goods being manufactured. Normally permission is not granted to avoid hotchpotch. Answer to your third question is "YES'. It is not possible to hide import price.

[ASHOK AMIN]

Dear Sir,

Satisfied with your reply of point no 2 & 3. But, I am not yet clear on point no 1. We want to carry trading activity without any registration formalities from our engineering plot. We will not avail cenvat credit and will maintain proper records like register, invoice etc separately. Can we carry on trading activities from this plot ? We will intimate our range office with proper revised ground plan accordingly. Sir, please clarify on this point.

[Ganeshan Kalyani]

Sir now since the concept of Bonded storage within factory is done away then the department should allow to carry out trading also provided the records are separately maintained. Sri Kasturi Sir please share your view in this regard. Thanks.

[KASTURI SETHI]

There are no prohibitory provisions in this regard in the the present rules as there is no corresponding provisions of erstwhile Rule 51 A & 173 H of Central Excise Rules, 1944. At the same time it is advised that do not intermingle two types of goods i.e. manufactured and trading goods (duty-paid and non-duty paid or non-excisable) for your convenience and proper accountal. Be practical. Do not forget the Govt. has made separate provisions for registration of 'Manufacturing' and 'dealing in duty-paid excisable goods as trader'. Also agreed with Sh Ganeshan Kalyani Sir to the extent that the concept of bonded store room (EB-4) has been done away. It is my personal view that keeping both type of goods though earmarked separately invite trouble to the manufacturer-assessee. Rest decision is yours. After all laws have been framed for convenience of the assessees.

[Ganeshan Kalyani]

Sir, I am indebted to you, Sri Kasturi Sir for sharing your valuable knowledge and advise.

Yes the querist should follow what the provision states, otherwise litigation cost are too high and the time taken and the mental stress are tremendous.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

In continuation to my above reply, I further add that now-a-days with the abolition of EB-4, the whole factory is bonded store-room i.e. excisable finished goods can be kept anywhere in the factory premises. Excisable finished (manufactured) goods on which duty has to be paid at the time of removal from the factory.Registration certificate has been issued for manufacturing excisable goods and storage thereof. This registration is not meant for trading of duty-paid/non-excisable goods or bringing already duty paid goods. I repeat there is separate registration for trading.

[surya narayana]

Dear Friend,

This issue was earlier discussed and clarified at length and you may also refer the same.

Further, as I clarified in earlier query, Manufacturing and trading activity can be carried out in a single premises provided that if the separate records for both are maintained and the place of manufacture and trading are de-markated and inform the same to the Department . Excise Registration is not required if you are not going to issue any cenvatable invoice ( passing on the duty paid by the original manufacturer) in your trading activity .

If you want to issue cenvatable invoices, you have no option except, to take a seperate Registration as Dealer.

As stated by you that you are not availing cenvat credit on the materials purchased meant for Trading. Pl. note , in trading activity, provision for availing cenvat is not there and if you are a Registered Dealer, you have to maintain RG23 Register which contains duty paid and passed on sale etc.

Your query regarding how to avoid customer knowing your import price is concerned, you have no option to avoid this if you want to issue cenvatable invoice in the capacity of a Registered dealer as the format of invoice mandates for showing the details of quantity importer/procured , value and duty paid.

The only option to avoid this is to carry out the trade without registration and to issue only commercial invoice with the agreed sale price to your customer including duty element subject of course to the condition that your customer accept for such practice and prepared to forego the cenvat facility. I personally feel that , no customer accepts for this .

Best Regard

Ssuryanarayana

[KASTURI SETHI]

I concur with the views of Sh.Surya Narayana, Sir.

[ASHOK AMIN]

Thanks for all the advise from the experts. I fully agree with the opinions and replies of all the experts. But with due respect i once again would like to mention here that in this case the goods are not identical. The unit where we propose to undertake the trading of electrophoretic chemicals is registered for manufactruring of engineering goods. Further i mention here that the engineering manufacturing and storing of goods is situated in the ground floor whereas the trading for chemical goods will be operated from the first floor. Secondly, the manufacturing of electroplating chemicals are under other three plots. The only thing here is that all the four plots are in the same compound and have one registration. The trading unit which is at present adjacent to one of the plot is not registered but due to shortage of space issue we have to shift it to the plot where the manufacturing of engineering goods are undertaken. Please throw some light in this regard.

[Ganeshan Kalyani]

Sir in my view as a last resort a permission should be sought from the Jurisdictional office requesting for permission. Thanks.

[ASHOK AMIN]

Dear All Experts,

Thanks for all the valuable replies.