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Manufacturing industry

A common practice in the production and manufacturing sectors regarding the purchase of raw materials/input goods is that when they are purchased are tested for required quality standard. After testing, certain items are rejected and    the monetary value of those items is deducted from the total purchases made from the supplier. The rejected items of raw materials/input goods are retained by the purchaser and sold in bulk after a certain period. The amount thus collected from the sale of the rejected items is retained by the purchaser. This is the first step and as per Shariah the execution in the manner stated above is impermissible.

How to correct the first step from Shariah perspective:

  1. The items of raw materials/input goods are the property of the supplier and therefore permission from the supplier regarding disposal of rejected items either be taken verbally or in writing.
  2. When the supplier has been informed about rejected items, supplier instructions as given in point #1 should be followed by the purchaser in letter and spirit. The instructions could either be for return to supplier or sale of the rejected item by the purchaser.
  3. If the supplier has allowed the purchaser to sell the rejected items in open market then the purchaser is bound to return the amount received from the sale of rejected items to the supplier immediately or the amount to be adjusted against future purchases.
  4. In case where amount is to be adjusted against future purchases, the purchaser now in terms of Shariah has become a "trustee" of that amount and should take utmost care in full-filling its obligation for settlement at the earliest.

In this way the first step for production and manufacturing can be saved from becoming impermissible or haram.

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