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Applicability of excise duty

CA Amit Kumar Shrivastava (CHARTERED ACCOUNTANT) (104 Points)

10 January 2014

Dear All,

A trader, who dispathes goods to the manufacturer (job worker) for repairing purpose, of the sales returned goods, which were sold earlier, is falls under the definition of manufacturing or not?

Thanks

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6 Replies

Arun Kumar Singh (GST Advocate) (15188 Points)
Replied 10 January 2014

Repair does not amounts to manufacture.

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karan jit singh (Consultant) (1299 Points)
Replied 17 January 2014

Originally posted by : CA Amit Kumar Shrivastava
	Dear All, A trader, who dispathes goods to the manufacturer (job worker) for repairing purpose, of the sales returned goods, which were sold earlier, is falls under the definition of manufacturing or not? Thanks

The process of just repairing is not called manufaturing but special provisions made for this situation under CER,2002.

Reffered from rule 16

If any manufacturing activity received its final product on which , ED was paid on its removal, then on such FP manufaturing unit are admissible to take Cenvat credit on such returned goods.

Therefore , subsequently after repair of such good the same good is liable to pay an amount equal to Cenvat Credit entitled at the time of receipt, on removal of the same goods.

Please Note: The amount should be adjusted again PLA in same day or adjust against the Cenvat Credit (Rule 3(4)(c) of CCR). This cannot allowed for payment till 5th or 6th of subsequent month.

Now, I know what comes in your mind, that why there is need to book Cenvat Credit when the same I adjusting it on removal of such good . This provisions is to be applied because accordingly you have to make entries in Accounts as well as Records maintained under Cenvat rules.

Regards

Karan

karan jit singh (Consultant) (1299 Points)
Replied 17 January 2014

and subsequently dealer is eligible to pass this amount as per Rule 16(2).

Refer explainations of rule 16(2) of CCR,2004

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CA Amit Kumar Shrivastava (CHARTERED ACCOUNTANT) (104 Points)
Replied 18 January 2014

Thanks, but Your reply is in relating to the concern, which is involved in manufacturing activity and Rule 16 is also applicable for a manufacturer. But in my case, trader sends sales returned FP for repairing, which is not registered under CBEC. Trader role is to purchase the goods and sale the same as it is without labeling/ relabeling or making any changes in such product.

karan jit singh (Consultant) (1299 Points)
Replied 18 January 2014

Originally posted by : CA Amit Kumar Shrivastava
	Thanks, but Your reply is in relating to the concern, which is involved in manufacturing activity and Rule 16 is also applicable for a manufacturer. But in my case, trader sends sales returned FP for repairing, which is not registered under CBEC. Trader role is to purchase the goods and sale the same as it is without labeling/ relabeling or making any changes in such product.

Yes CA Amit Kumar , I focused on manufacture, as Dealer is nothing have to pay a single penny to CG.
The only thing he will going to do that he will pass the amount levied under section 16(2) by the manufacturer when the same goods is again cleared after getting repaired.

Regards

Karan