limit for registration???
This query is : Resolved
20 February 2010
hello everyone,
one of our client(proprietor) is engaged in mfg of paper boxes has two factories one is m/s. x & co and other is m.s. y&co.
he is the proprietor of both business.
one factory (old one) is regd under mvat act 2002 and is also subject to audit.
he started the other factory in june 2009.
my question is
1)what is the limit for registration under excise and
2)will the sales of both the factory will be taken into account??
3) labour work done will also be considered for turnover ???
one of our client(proprietor) is engaged in mfg of paper boxes has two factories one is m/s. x & co and other is m.s. y&co.
he is the proprietor of both business.
one factory (old one) is regd under mvat act 2002 and is also subject to audit.
he started the other factory in june 2009.
my question is
1)what is the limit for registration under excise and
2)will the sales of both the factory will be taken into account??
3) labour work done will also be considered for turnover ???
20 February 2010
It is most likely to be clubbed. The excise limit is 1.5 crores ie SSI exemption. For VAT you will have to club anyway.Pure labour work shall not attract excise duty.
siva208@yahoo.com
siva208@yahoo.com
20 February 2010
For the purpose of Central Excise a manufacturing unit having a secure boundry around the manufacturing facility is considered as one unit and will be liable to excise duty if the turover from that identifiable unit exceeds Rs1.50 cr.There is no such thing as clubbing for excise purposes.If a company has any number of clearly identifiable manufacturing facilities each unit will require to be registered seperately under the provisions of the Central Excise Rules,with the Central Excise Authority under whose jurisdiction the unit falls geographically, if the turnover of such unit crosses Rs1.50 cr.
20 February 2010
Attention is invited to the decision of the CEGAT in Heemanshu Traders v CCE 2003(153) ELT 119 wherein clubbing of various small units of the same assessee was upheld. Clubbing was upheld by the Hon Supreme court in Modi alkalies case but facts there were different from your case. See other decisions in 91 ELT 153, 103 ELT 551 and a number of other decisions where clubbing of different units for excise purposes were upheld.The turnover of 5 private limited companies and 2 firms were clubbed in the case of Lubricare relays ltd v CCE 125 ELT 904. So beware of the clubbing.
The Dept usually try to invoke this clubbing provision when the second/ subsequent units are nothing but a sham and created only for getting the benefit of excise exemption (with no other justifiable purpose). You must also bear in mind the Supreme court decision in Macdowells case where colorable tax planning devices were disapproved.
But generally speaking clubbing is difficult. That is the reason why I used the expression "most likely to be clubbed" in my first reply.The Dept has to prove common magt, control, finance, facilities, flow back of funds,same premises,dummy nature of the units etc etc.But you cannot totally brush aside the action from the Dept in view of the number of litigation going on between the assessee and the Dept.
siva208@yahoo.com
The Dept usually try to invoke this clubbing provision when the second/ subsequent units are nothing but a sham and created only for getting the benefit of excise exemption (with no other justifiable purpose). You must also bear in mind the Supreme court decision in Macdowells case where colorable tax planning devices were disapproved.
But generally speaking clubbing is difficult. That is the reason why I used the expression "most likely to be clubbed" in my first reply.The Dept has to prove common magt, control, finance, facilities, flow back of funds,same premises,dummy nature of the units etc etc.But you cannot totally brush aside the action from the Dept in view of the number of litigation going on between the assessee and the Dept.
siva208@yahoo.com
20 February 2010
Supreme Court passed the following order in the case of Diwan Sons (India) Pvt. Ltd
"By consent the matter is taken up for final hearing.In this case the matter needs to be remitted to the Tribunal to decide whether there existed dummy units set up by the assessee as alleged by the Department. If so, whether transactions undertaken by the assessee have been routed through the dummy units. It is in this context that the Tribunal will also decide as to who was the real manufacturer of the items in question. Depending on the answers to the above issues the Tribunal will then decide the question regarding applicability of the Exemption Notification.
Accordingly, the impugned judgment is set aside, the matter is remitted to the Tribunal for consideration in accordance with law.
Accordingly, the appeal is disposed of with no order as to costs".
The Appellate Tribunal in its impugned order had held that production of Diwan Sons (India) Pvt. Ltd. had been artificially split up into three units while the three units continued to function under the control and supervision of Surinder Diwan and Sudhir Diwan, the Directors of Diwan Sons (India) Pvt. Ltd., and all the raw materials including their brand name labels were being supplied by it and the designer of the three units was common, therefore clearances thereof were liable to be clubbed.
"By consent the matter is taken up for final hearing.In this case the matter needs to be remitted to the Tribunal to decide whether there existed dummy units set up by the assessee as alleged by the Department. If so, whether transactions undertaken by the assessee have been routed through the dummy units. It is in this context that the Tribunal will also decide as to who was the real manufacturer of the items in question. Depending on the answers to the above issues the Tribunal will then decide the question regarding applicability of the Exemption Notification.
Accordingly, the impugned judgment is set aside, the matter is remitted to the Tribunal for consideration in accordance with law.
Accordingly, the appeal is disposed of with no order as to costs".
The Appellate Tribunal in its impugned order had held that production of Diwan Sons (India) Pvt. Ltd. had been artificially split up into three units while the three units continued to function under the control and supervision of Surinder Diwan and Sudhir Diwan, the Directors of Diwan Sons (India) Pvt. Ltd., and all the raw materials including their brand name labels were being supplied by it and the designer of the three units was common, therefore clearances thereof were liable to be clubbed.
21 February 2010
Thanks Mr Chettor for confirming what I have stated.
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