Query on excise
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 May 2014
I am in a software business. I intend to purchase tablets, will disable all the software applications on tablets, install my software on tablets and sell it to customers. I would be selling customized tablets to customers. However,if customer is unhappy with my software, he can approach either me or registered dealer to enable all applications and remove my software.
Would this be treated as manufacture and am I required to pay excise duty. kindly clarify.
Would this be treated as manufacture and am I required to pay excise duty. kindly clarify.
10 May 2014
This activity is not manufactured. So, no need to pay excise duty.
Message likes :
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Querist : Anonymous
Querist :
Anonymous
(Querist)
13 May 2014
Can you please elaborate on what basis it is not regarded as manufacture
10 August 2024
In the context of Indian Excise Law, the determination of whether a particular activity constitutes "manufacture" and whether Excise Duty is applicable depends on the nature of the activity and the definition of manufacture under the relevant laws.
### **Key Points to Determine Manufacture Under Excise Law:**
1. **Definition of Manufacture:**
- According to the Central Excise Act, 1944, "manufacture" is defined as:
- **Section 2(f):** Production of goods by any process, which includes any process incidental or ancillary to the completion of a manufactured product.
2. **Software Business and Excise Duty:**
- **Manufacture of Goods:** For excise duty purposes, "manufacture" generally refers to the production of tangible goods. The Excise Act primarily deals with the manufacture of physical goods and commodities.
- **Intangible Software:** The primary product in your scenario is software, which is an intangible asset. The installation of software on tablets and its customization for end-users does not typically fall under the category of "manufacture" of tangible goods.
3. **Tablets and Customization:**
- **Customized Tablets:** You are providing tablets with pre-installed software, which involves customizing hardware (tablets) to include your software. However, this customization primarily involves the software aspect rather than the tangible goods' production or processing.
- **Nature of Customization:** If the process of customizing the tablets does not result in a new or distinct product but merely adds software functionality, it generally does not qualify as "manufacture" for excise duty purposes.
4. **Excise Duty Applicability:**
- **Excise Duty on Goods:** Excise Duty is typically applicable on the manufacture of goods and products like chemicals, machinery, and other tangible assets. Since your business involves software and customization rather than producing tangible goods, excise duty is generally not applicable.
- **Software Sales:** Software sales and services are usually not subject to excise duty. Instead, they might fall under the realm of GST (Goods and Services Tax) if the transaction is taxable under GST laws.
5. **Legal Precedents and Interpretations:**
- **Court Rulings and Clarifications:** Historically, courts have interpreted the term "manufacture" in a way that excludes the production of intangible software from excise duty. Customizing tablets by installing software is generally considered a service rather than manufacturing a new product.
### **Conclusion:**
In your case, the process of installing and customizing software on tablets does not constitute "manufacture" as defined under the Central Excise Act, 1944. Therefore, **Excise Duty** is **not applicable** to your business operations.
### **What You Should Consider:**
1. **GST Applicability:** While excise duty may not apply, your transactions might be subject to GST. Ensure compliance with GST regulations by checking if you need to charge GST on your sales of customized tablets.
2. **Consultation:** For precise advice and compliance, it's advisable to consult with a tax professional or a consultant who specializes in excise and GST laws.
**Summary:** The activity described (customizing tablets with software) does not generally qualify as "manufacture" for excise duty purposes. Excise duty primarily pertains to the production of tangible goods, and software is considered an intangible asset.
### **Key Points to Determine Manufacture Under Excise Law:**
1. **Definition of Manufacture:**
- According to the Central Excise Act, 1944, "manufacture" is defined as:
- **Section 2(f):** Production of goods by any process, which includes any process incidental or ancillary to the completion of a manufactured product.
2. **Software Business and Excise Duty:**
- **Manufacture of Goods:** For excise duty purposes, "manufacture" generally refers to the production of tangible goods. The Excise Act primarily deals with the manufacture of physical goods and commodities.
- **Intangible Software:** The primary product in your scenario is software, which is an intangible asset. The installation of software on tablets and its customization for end-users does not typically fall under the category of "manufacture" of tangible goods.
3. **Tablets and Customization:**
- **Customized Tablets:** You are providing tablets with pre-installed software, which involves customizing hardware (tablets) to include your software. However, this customization primarily involves the software aspect rather than the tangible goods' production or processing.
- **Nature of Customization:** If the process of customizing the tablets does not result in a new or distinct product but merely adds software functionality, it generally does not qualify as "manufacture" for excise duty purposes.
4. **Excise Duty Applicability:**
- **Excise Duty on Goods:** Excise Duty is typically applicable on the manufacture of goods and products like chemicals, machinery, and other tangible assets. Since your business involves software and customization rather than producing tangible goods, excise duty is generally not applicable.
- **Software Sales:** Software sales and services are usually not subject to excise duty. Instead, they might fall under the realm of GST (Goods and Services Tax) if the transaction is taxable under GST laws.
5. **Legal Precedents and Interpretations:**
- **Court Rulings and Clarifications:** Historically, courts have interpreted the term "manufacture" in a way that excludes the production of intangible software from excise duty. Customizing tablets by installing software is generally considered a service rather than manufacturing a new product.
### **Conclusion:**
In your case, the process of installing and customizing software on tablets does not constitute "manufacture" as defined under the Central Excise Act, 1944. Therefore, **Excise Duty** is **not applicable** to your business operations.
### **What You Should Consider:**
1. **GST Applicability:** While excise duty may not apply, your transactions might be subject to GST. Ensure compliance with GST regulations by checking if you need to charge GST on your sales of customized tablets.
2. **Consultation:** For precise advice and compliance, it's advisable to consult with a tax professional or a consultant who specializes in excise and GST laws.
**Summary:** The activity described (customizing tablets with software) does not generally qualify as "manufacture" for excise duty purposes. Excise duty primarily pertains to the production of tangible goods, and software is considered an intangible asset.
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