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Manufacture of different excisable goods in same compound

CA Jai Govind Modi (Business) (36 Points)

04 February 2013

We are about to start factory of two mutually exclusive excisable products in same factory compound with different firm names but same partners and in same profit sharing ratio. Land belongs to relative and will be taken on lease.

I wish to know whether the Excise officer can combine the limit of 1.5 Crores of both the units or will we be able to take the benefit of limit of 1.5 Crores separately in both firms.

Also suggest remedy.

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6 Replies

Arun Kumar Singh (GST Advocate) (15220 Points)
Replied 04 February 2013

Turnover of two different factories owned by different firms having common partners cannot be clubbed as each partnership firm is entitled to separate exemption.

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CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)
Replied 04 February 2013

According to my knowledge department normally denies the exemption on the ground that one manufacturer wants to split one unit into various units to take advantage of nil duty clearances upto 150 lakhs in respect of each unit, it is the contention of the department, therefore the department denies the benifit of exemption notification when they find common directors, common usage facilities including funds, common partners.

Hence in my view excise officer may investigate in ur case & can combine the clearances.

CA BARKHA MITTAL (B.COM, CA) (149 Points)
Replied 05 February 2013

Where a Manufacturer clears the goods from one or more factories, the exemption in his case shall apply to the aggregate value of clearences & not separately for each factory (As per SSI Notification: 8/2003) Value based Exemption Notification. In the present case you will not be able to take the benefit of both the firms separately. Benefit will be available on aggregate value of goods of both firm on their first clearences.

CA Jai Govind Modi (Business) (36 Points)
Replied 05 February 2013

I wish to draw your attention towards the fact that the good to be produced are mutually exclusive and do not have any kind of relation. Raw material and facilities to be used will be separate. Its only that the location of factories is in the same premises.

C.V.R.SARMA (SERVICE) (90 Points)
Replied 06 February 2013

Clubbing of clearances do not depend on the products and raw material of the units. Please don't think in that direction. In the instant case, both the firms are in the same location and the partners of the same. In such a case, movement of finances would naturally be from one unit to the other and directly or indirectly one unit influences the other. It is a fit case for clubbing of clerances for any Central Exise Officer.