Loan Licencee scheme, Central Excise

[saumya gupta]

If it is possible to clear goods without payment of duty upto 150 lacs by actual factory and on payment of goods of Loan licencee using the same premises through cenvat and pla simulteniously.

" Loan licencee paying duty and availing cenvat credit while actul factory availing 08/2003 CE simulteniously"

Plz reply soon

Posts / Replies

[Alok Kumar]

Dear Ms  Saumya,

The question as to whether a loan licencee manufacturer can be a manufacturer as defined under the provisions of the Central Excises & Salt Act and the goods manufatcured by them will be subject to central excsie duty (taking into consideration the SSI Exemption notification as quoted by you in your query)  has already been dealt with by various courts. Wherein it was held that the loan licencees governed by the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 can utilise the factory premises of other persons where they can get their goods manufactured under their own control and supervision and if they manufacture excisable goods, they would be treated as manufacturers within the meaning of the Act. . Thus the concept of loan licencee manufacturer is also recognised under the provisions of the Central Excises and Salt Act, 1944. Therefore, the loan licencee manufacturer and the primary manufacturer are being recognised under the provisions of the Act and the Rules. 

Where a factory is  producing the specified goods is run at different times during a financial year by different manufacturers the aggregate value of clearances of the specified goods from such factory in any such year shall not exceed rupees one hundred and fifty  lakhs in terms of the norfn no. 08/2003 central excise.

thanks,

Alok Kumar

Consultant and Advocate