Shifting of factory – what about final products?
We received this query from one of our Netizens.
I am a manufacturer. The manufacturing operations are being carried out in a rented gala in an industrial estate in Mumbai. I avail Cenvat credit and discharge Central Excise duty. Recently, the owner of the industrial estate served us a notice to vacate the premises as he wants to construct a shopping mall. Bad times have fallen upon us, Sir. I have managed to get another premises on hire on the outskirts of the town. I would be surrendering my registration certificate and shifting the installed machinery, raw materials and cenvatted inputs to the new place in a month's time. There are no Central Excise dues pending against me as on date and hence I do not foresee any problems in cancellation of registration certificate.
As far as transfer of the Cenvat credit lying un-utilized is concerned, I am aware that rule 10 of the Cenvat Credit Rules, 2004 lays down the procedure and the precautions that I have to take while relocating the factory.However, my problem is that I am having a huge stock of finished goods lying in the factory as on date and in spite of my best efforts I am unable to find buyers for the entire finished goods. So, when the day comes for me to move out of the present premises, I will also be required to shift the finished goods. I am aware that as per Rule 4 of the Central Excise Rules, 2002, I would be required to pay the Central Excise duty on these goods. I do not wish to clear these goods to a non-existent buyer and bring back these goods to my new factory premises as it also incurs un-necessary expenditure on account of local taxes, transportation charges etc. A friend of mine informed that this is the only procedure that is available and which is legally permitted in terms of Rule 16 of the CER, 2002.
I find that the earlier rule 47 of the CER, 1944 contained the following sub-rule (5) which could cater to the situation that I am in. It read –
“(5) Notwithstanding anything contained in sub-rule (1), the Central Board of Excise and Customs may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods in any other place outside such premises, without payment of duty subject to such conditions as it may specify; and the provisions of sub-rules (2) to (4) shall apply to such place of storage as they apply for storage of goods in a store-room or other place of storage within the premises of the manufacturer, where the goods are made.”
I am also aware that the munificent Central Board of Excise and Customs has extended facility to store non-duty paid goods outside the factory premises even during the regime of the CER , 2001 and the current CER , 2002 although there are no express provisions in the rules, as communicated through its Circular 610/1/2002- CX dated 01.01.2002 and modified by Circular 709/25/2003- CX dated 23.04.2003 (whereby even the Merchant Overtime charges prevalent earlier as per the concept of physical supervision has been waived).
As to whether the said Circulars can be made applicable to my case is what I am apprehensive about.
Therefore, through the DDT column, I solicit the views of the Netizens.