Liability of excise duty

826 views 3 replies

Brijesh Tripathi

26 Points Joined November 2008

A good day to all of you. Requesting you to please resolve my query. Thanks in advanse to all of you.

Situation is like that

Our Co. say X manufactures furniture, which is excisable. We are paying excise duty on removal of goods from factory.
Let we purchase some furniture from co. A and directly delivered it to premises of other co. B. We raise purchase order in the name of co. A , and made Goods Receipt Note after delivery at Co. B. We never bought the material at our factory premise ie co. X. We take payment from co. B and pay to Co. A. My query is what document to be given to Co. B from Co. X. Is it excise invoice or commercial invoice. WilI we have to charge excise duty from Co. B. Please advise me?
regards

Replies (3)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

you dont have to charge excise duty as excise duty is charged on clearence of manufactured goods only.

but

the goods are same or simileer to your production line, so the department ( remember its indirect tax where they suspect every activity which is done without revenue), would cross examine the trading activity with A, and if they are not confirmed then it would get turned to clearance of self made goods evading duty,

so its always advised not to do trading business from same business of manufacture , or atleast not from same premises, where manufacturing activity is done, you can use a seperate head office or godown or a seperate business identity to do so, as these activities are always viewed by department as evasion prone, and they scurtinize the transactions, unless they get satisfied that payment of duty is done by A in proper way.

CA Saiyum khan

Practicing CA

690 Points Joined November 2008

If you are receiving proper excise invoice from A (if A is manufacturer) and you are also maintaining the record of genuine ness of transaction then nothing to worry. But if A is also trader then department may go to dig out the details who was the actual manufacturer and whether excise is paid or not. if duty payment could not be proved through audit trail. Department may charge to all the parties involved in such transaction. To that extent risk is there in doing trading activities along with the manufacturing of excisable goods.