Become a Certified GST Practitioner this February. Register Now!

Removed as such

shamala (ACCOUNTANT) (27 Points)

15 October 2011

If a manufacturer purchase some materials after getting our lable fixed at manufacturer place, by paying excise duty and sold it "REMOVED AS SUCH" how much duty he has to pay? Whether on selling rate or purchase rate ? whether he has to take cenvat credit and debit the duty

Reply
Follow
Share

6 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 15 October 2011

Trading goods are not liable to excise duty. But if the bought out goods are cleared along with manufactured goods as standard accessary, then duty is leviable on value of such goods along with the value of the principal item. In such case cenvat credit is admissible on the bought out goods.

Upgrade to CAclubindia Pro. Subscribe Now!

HS Negi (Senior Executive- F&A) (590 Points)
Replied 19 October 2011

Dear Shamla

You have to reverse the cenvat credit in proprtionate of qty reversed.

Regards

HS Negi

shamala (ACCOUNTANT) (27 Points)
Replied 21 October 2011

Originally posted by : shamala
	If a manufacturer purchase some materials after getting our lable fixed at manufacturer place, by paying excise duty and sold it "REMOVED AS SUCH" how much duty he has to pay? Whether on selling rate or purchase rate ? whether he has to take cenvat credit and debit the duty

Dear sir,

My question is A & B both are manufacturer of capital goods, due to urgency A cannot manufacture the item at his factory, so he purchases the items from B and gives him the "A" s lable to fix at "B" s factory. and truck is loaded from "B"s factory only by sending A's excise invoice. B sells the item at Rs.800/- and charges excise duty @ 10.3% and A is selling the item at 850/- + ED at 10.3% but the question is on how much amount excise duty to charge. pleas clarify. Whether A can remove the materials on REMOVED AS SUCH and debit the duty only on 800???(purchase rate)

hanks

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 21 October 2011

B is the manufacturer and hence B is liable to excise duty. B raises bill on A and A in turn sells to another . For A it is only trading and therefore A has no duty libility. A can pass on duty for cenvat purpose through dealer registration.

shamala (ACCOUNTANT) (27 Points)
Replied 21 October 2011

Sir,

but A is fixing his brand lable in B 's product and takes cenvat credit of duty and sells on excisable invoice as A is already a Excise Registrered manufacturer and dont have any seperate dealer regn. that time can he remove the materials purchased from B with fixing lable and adding profit and duty of purchase rate by mentioning in A's invoice REMOVED AS SUCH? or he has to charge duty on selling rate? please clarify.

Thanks

Upgrade to CAclubindia Pro. Subscribe Now!

CA Nitin Karmalkar (Senior Associate) (70 Points)
Replied 21 October 2011

Dear Shamala,

First make it clear that Excise duty will be charged on manufacture. In your case A does not manufacture anything. He just taking FG from B & suppling to his customer by adding profit.

However as per deemed manufacture concept relabelling amounts to manufacture subject to same is mentined in Section Notes or chapter notes of CETA.. In your case goods are labeled at B's factory only. So no question of manufacture will arise.

So you have to just pay duty equals to cenvat availed on goods purchse from B. And in respect of profit portion you have to levy VAT only. Same duties will levied though he is manufacturer & not a dealer.

1 Like