I propose to by cotton yarn and give it to towel manufacturing SSI units for manufacturing towels on my behalf for which I shall pay to them labour charges. Thus l get manufactured towels from the manufacturing units to whom I supply cotton yarn & pay labour charges. I do not own any machinery or plant for manufacturing towels. I own only yarn and towels. The manufacturing units own machinery or plant for manufacturing of Towels.
My query is : 1. I buy yarn. I hand over yarn to towel manufacturing units (not sale to them)
(Rs. 3 Crores)
2. I pay conversion (labour) charges to manufacturing units ( Rs. 20 lacs to each).
3. I sale towels in the open market (Rs. 5 crores).
WHETHER I AM REQUIRED TO PAY EXCISE.
I feel that I am not being a manufacturer (a contractee) excise is not applicable to me even though my sales exceed Rs. 1.5 crores in a year.
Madhav Narhari Kadadas
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