Normally, if assessee is engaged in manufacturer on job work basis, he has to pay duty on material cost plus job charged. However, if a product covered under MRP provision is manufactured on job work basis, duty will be payable as per provisions of section 4A, i.e. on basis of MRP less abatement.

Provisions of Exemption to job work under Notification No.214/86

  • No duty liable to job worker- It has been held that there is no duty liability on the job worker when material is sent under Cenvat provision or under 214/86-CE.
  • Declaration under notification 214/86-CE- It is advisable that the declaration under Notification No. 214/86-Ce is given if the material is being sent directly to place of job worker from supplier of inputs, without bringing it in the factory, to avoid fruitless controversies.
  • Raw material as well as semi-finished goods can be sent out for job work. The exemption is available even if the job worker manufactures an intermediate product.
  • Notification No.214/86-CE does not prohibit a job worker from utilizing other inputs in addition to raw material received by him and recover charges therefore from the principal manufacturer.

Provisions related to Removal of goods for Job Work

  • Removal for processing/test- The inputs/capital goods can be removed as such or after partial processing to job worker for further processing, testing, repairs, reconditioning, or for manufacture of intermediate goods necessary for manufacture of final products or any other purpose without any duty payment.
  • Goods should be returned to factory/premises of service provider- After carrying out the operation/test/repair etc., the goods should be returned to the factory or premises of supplier within 180 days. If these are not received back within 180 days of their being sent out, manufacturer/ service provider should pay an ‘amount’ equivalent to Cenvat credit attributable to inputs/ capital goods. Payment can be through Cenvat credit or P LA. If the inputs/ capital goods come back after 180 days , then manufacturer/service provider can again take Cenvat credit of duty reversed by him.
  • If part of goods is received back 180 days, the obligation for debiting the credit shall arise only in respect of Cenvat credit attributable to that part which is not received within 180days.
  • No Reversal even if capital goods not returned within 180 days- Incase of Capital goods sent to job workers even if they are not returned by job worker within 180 days , Cenvat Credit is not required to be reversed .
  •  Moulds and dies, jigs and fixtures are not required in 180 days- The requirement that the
    capital goods/ input must come back within 180 days is not applicable to moulds and dies.

DOCUMENTATION IN DIFFERENT SITUATIONS :Direct dispatch of inputs to job worker – It is advisable that even when goods are sent directly to job worker’s place, a delivery challan should be prepared by manufacturer for control purpose. The delivery challan should clearly state that goods have been sent directly to job worker’s place by the supplier The manufacturer can avail Cenvat credit only after all inputs are received after job work.

Returning of goods by job worker – Goods should be returned by job worker under his own challan, giving reference to challan of the manufacturer who has sent the inputs/capital goods. Goods can be returned by job worker in piece-meal under different challans on different dates.

Cenvat Credit rule 6(3)(b) (i.e. Payment of ‘amount’) will apply

SOME IMPORTANT POINTS TO BE KEPT IN MIND REGARDING JOB-WORK :

Use of incidental material is no bar in job work – Additional of minor items by job worker would not detract it being a job work. If some negligible raw material is used by job worker, it will still be job worker, if such use is only incidental nature.

No duty on Invisible losses – No duty is payable on invisible losses during processing even if such losses were higher than those permitted by raw material supplier and raw material supplier issues debit note for excess losses.

Goods can be sent another unit of same manufacturer for job work and return.

Waste generation after goods are returned is permissible – Generation of waste and scrap is only incidental to manufacturing of final product and it cannot be said that input (proportionate to the weight of waste and scrap generated) have not been used in the manufacture of such specified final product. Percentage of waste generation will no be relevant.

Job worker can pay duty even if material sent under – Normally, job worker is not required to pay duty, if material is sent under Cenvat provisions. However, in some cases, he may like to pay duty, if –

(a)He has put his own inputs

(b)  He has unutilized Cenvat credit.

Procedure permissible even if identity of inputs gets lost or inputs burnt – Cenvat credit is available even if identity of inputs is lost when job worker returns the goods after processing

PLACE OF REMOVAL :When goods are sold at the factory of job worker by principal Manufacturer – Value will be the ‘transaction value of the goods at which the goods are sold’ by the principal manufacturer for delivery at the time of removal of goods from the factory of job worker.

When goods are sold by principal Manufacturer from some other place – If goods are delivered at other place (e.g. depot, branch, godown etc.) and sold from there, the valuation will be on the basis of ‘normal’ transaction value of goods at or about the same time’ by the Principal manufacturer from such place. Cost of transport from premises from where goods sold to place of delivery will not be included in the assessable value.

Inputs sent directly to job worker from place of manufacturer of inputs – In some cases material may be procured by principal manufacturer, but may be sent directly to job worker for manufacturer. In such case, if the name of job worker is shown as consignee, the job worker can avail Cenvat credit on basis of such invoice.

Job worker can take Cenvat Credit on basis of invoice issued by registered dealer. Job worker cannot avail Cenvat credit if raw material supplier has availed the same.

PROPOSED CHANGES IN EXCISE RATE IN INTERIM BUDGET 2014 :-

Item

Previous rate of duty

Proposed Rate of Duty

Small Cars , 2 Wheelers ,
Commercial Vehicl

12%

8%

SUV Cars

24%

20%

Mobile Phone

12%

6%

Some Capital Goods , Consumable Durable

12%

10%

CA Nandan JalukaCA Nandan Jaluka
Mobile : +91-84060 00707
E-mail :
jalukanandan@gmail.com
CA Sonam Agarwal JalukaCA Sonam Agarwal Jaluka
Mobile : +91-84060 00706
E-mail :
sonamjaluka@gmail.com

More Under Excise Duty

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Category : Excise Duty (4144)
Type : Articles (16988)
Tags : CBEC (400) Work Contract Tax (19)

19 responses to “Excise Duty on Job Work”

  1. Mohit says:

    Sir,
    If i do job work for a exempted unit, then do i have any liability to pay excise duty??

  2. surya prakash singh says:

    Dear Sir/Madam
    We are some material to our job worker on annexure and hw will process with him yourself material which is excisable and returning our material our annexure and hw will raise the tax inv bill with excise duty.so that I want to know that it is applicable.

  3. madhav says:

    is excise duty levied when 1 unit provide job work to another unit of the same company in the same state.

  4. Suresh says:

    Dear Sir

    Please Suggest Dealer can issue a Job work challan & received
    for job works.

  5. Santosh Kumar Singh says:

    Dear Sir,

    i have received Finished goods material for JOB-WORK ( for repacking only )
    party raise the invoice of the name of my company and issue only cenvate 14 % & CVD 4%, after repacking of finished goods material we will issue invoice to him and charge excise duty on MRP price
    kindly let me know notification number for the same and also let me know can require intimation to the Excise Superintendent for JOB-WORK practice

    regards
    Santosh Kumar Singh

  6. uma says:

    sir,
    i want to know if there is excise on job work done by fabric dyeing and ptg mills

  7. Biraris D.G. says:

    Dear Sir,
    we have sent the Semi finished goods to our vendor for turning & machining under rule 4(6) after machining generated scrap not to come back us due to distance are around 1200 km and as on date no customer to scrap purchase with duty and taxes
    my quotion is scrap cleared without ex.duty from vendor end and excise duty on scrap pay to excise what is the prociture pl.give meclarification.
    Pls. reply ASAP.
    Thanks & regards
    D.Biraris

  8. Manmohan Singh Negi says:

    Dear Sir,

    we have sent the some Raw materials / Cap. Goods of X supplier, & materials not sent to me more than 180 days , pls. advice me the charge of x supplier both type materials Raw Materials / Capital Goods ) same penality & different

    Pls. reply ASAP.

    Thanks & regards
    Manmohan Singh Negi

  9. sanjay says:

    Dear Sir
    we Have taken central excise reg & we have taken cenvat we want to do same job work pleaes tell me abbicable service tax on job work

  10. yogesh says:

    Sir ,

    our are manufacturer of raisin Kishmish, we purchase box foe packing our finished goods, the supplier charged 6% excise duty on bill, my question is why he charged. or excise duty is aaplicable on agricultural product..

  11. ramesh pandey says:

    sir,
    we are job worker and want to return raw material to same supplier without processing of . pl. guide

  12. Arun Singla says:

    Dear Sir,
    We are manufacturing pharmaceutical product and availing SSI exemption. Recently we manufacture product eg. ABC which is marketed by XYZ co. all the production carried out in our factory including purchase of material.
    Now Question arises whether this process is called job work or not?
    Since on bottle both name is return mft by :- DDDD & marketed by XYZ

    If yes then can we avail SSI exemption or not on such product?

  13. Sandeep Kumar says:

    Dear Sir, we are the manufacture of lighting fixture and have availed the SSI exemption but not insist in cenvat credit taken. please guide me which excise return need to be file ER 1 or ER 3. I am waitng ur reply. Thanks

  14. TUSHAR BARWAY says:

    Dear Sir,

    Kindly clify whether intimation is to be filled before Department? As the Jobworker wants acknowledged copy of said intimation to take the goods inside his premises.

    Regards

    TM Barway

  15. alagappan says:

    Can the principal company take the cenvat credit of RM inputs which principal procures from RM manufacturers and directly sends to job worker for processing. Thereafter principal intends to invoice and dispatch the material to their distributors directly from job workers premises.
    please advice

  16. gurpreet says:

    Dear Sir,

    Can the principal company take the cenvat credit of RM inputs which principal procures from RM manufacturers and directly sends to job worker for processing. Thereafter principal intends to invoice and dispatch the material to their distributors directly from job workers premises.

    Please advice.

  17. Rama Kant Sharms says:

    Dear sir,

    We want to send material for job work and we issue challan to job worker (4(5)a) now we want to know about what declaration we submit to excise department in this regards .

    thanks & Regards
    Rama Kant

  18. A.K.RASTOGI says:

    if the both copy of challan issued under 4(5) a challan are lost and capital goods sent under the above challan are received after 180 days, or we require to reverse the cenvat , secondly we can re-credit the reversed cenvat without copy of proper challan.

    Please advise.

  19. Rahul Kaulgud says:

    Thanks for such a very useful post in a very simplier way.

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