Greaves : An Analysis of Product Quality

& Customer Satisfaction

4.1 EXECUTION OF REQUIREMENT

Customer

Inquiry

Quotation Dealer

Order
Execution Via
Dealer Order

Manufacturer

The customer forwards Inquiry as per his actual requirement and

application.

The Dealer after consulting the manufacturer submits the most

appropriate Quotation meeting all technical requirements of the customer.

Customer on scrutinizing, modifying & negotiating with the dealer

places the order with definite terms & conditions.

The Dealer in turn places his order on manufacturer narrating all the
requirements & commitments made by him to the customer.

The manufacturer processes the order placed & executes it via Dealer.

4.1.1 TRANSACTION

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 Greaves : An Analysis of Product Quality
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As the material is ready for dispatch , manufacturer has to pay Excise

Duty1 to the Government & collect it from the Dealer @ 16% . In support of
this manufacturer gives Excise Duty Gate Pass which in business
language is more commonly known as EDGP. Dealer uses EDGP for
collecting Excise Duty amount from the customer. Customer uses EDGP
for claiming “CENVAT” from Government.

Over & above excise duty manufacturer is also charging Sales Tax
either CST ( Central Sales Tax ) or GST (Gujarat Sales Tax) as required.

4.1.2 CENTRAL SALES TAX (CST) :

CST is applicable when the transaction takes place between two states.
i.e. When Manufacturer & Dealer are stationed in Different States.
Concessional rate of CST is @ 4% against C – FORM. Whenever a firm is
started, for carrying out transactions between states the firm has to obtain
CST NO. from the Sales Tax Department. The firm not registered with the
Sales Tax Department has to pay full rate of tax i.e. 10% instead of
Concessional rate of 4%.

4.1.3 C - FORM

C- FORM is a very special type of form which is issued only to the Sales
Tax registered trader/ manufacturer & time to time a firm has to submit
details about use of C- Form to Sales Tax department.

Customer Dealer Manufacturer

C-FORM C- FORM

________________________________
1
EXCISE DUTY is the tax levied upon the manufacturer by the government.As per the new
Budget for the year 2004-05 government has levied additional “cess” of 2% on Excise duty
amount.

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 Greaves : An Analysis of Product Quality
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4.1.4 TRANSACTION FOR C-FORM

Manufacturer collects C- Form from Dealer, & Dealer collects C- Form

from the ultimate Customer. In case if customer is not a registered Firm
then Dealer has to charge the full rate of Tax i.e. 10%. In case if he fails to
do so, then Dealer is responsible for paying the full rate of Tax to
Government. Thus by carrying out transactions with C-Form our
Government is exercising control over all transactions so there is no
revenue loss to them.

4.1.5 LOCAL SALES TAX

It is applicable when the transaction takes place within the state i.e.
When the manufacturer & Dealer both are stationed in the same state. In
Gujarat it is known as Gujarat Sales Tax (GST)

The rate applicable for GST is different for different products. Concession
for GST is given to agricultural products. The GST applicable on different
products of GREAVES is as follows

PRODUCTS GST
Gensets 8%

Diesel Engine 4%

Gear Box 8%

Fluid Coupling 8%

All Construction 12%

Equipments
Agricultural Pump Set 4%

Power Tiller 4%

Tractor 4%

4.2 LORRY RECEIPT

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 Greaves : An Analysis of Product Quality
& Customer Satisfaction

Lorry Receipt more commonly known as LR is a Negotiable instrument

& a proof given by approved & reliable Transporter to manufacturer in
return of Material dispatched through them to various destinations. LR
covers Name of

Consignor – Name of the Firm (Manufacturer) handing over the

Material
Consignee – Name of Customer (Dealer & also final Customer) to
whom the material is to be delivered.

LR also covers the destination where the material is to be taken, brief

description of the material, approximate weight, freight amount & value.

4.2.1 LR TRANSACTION

Consignor when endorses LR in favor of Consignee, Consignee

automatically becomes the owner of the material. Consignee – Dealer can
then endorse again the same LR in favor of ultimate customer. Dealer at
that time collects the payment in exchange of LR. This Transaction is
known as “RR SALE2” in business language.

Manufacturer Transporter Dealer Customer

LR LR LR

For C- Form transactions only LR is traded or endorsed without taking

delivery of the actual material by the Dealer. In case if the Dealer takes
delivery of the material he is liable to pay the Local Sales Tax while
delivering it to the ultimate customer.

_____________________________
2
RR SALE is Railway Receipt Sale, which is nothing but the sale of LR.

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