We are a manufacturer of Excisable goods of Iron and Steel and are claiming CENVAT on inputs (Raw materials, Consumables etc.).
Also we are doing Job Work for some parties (Principals), who supply only Raw Material (Iron and Steel) to us.
For Job Work, we use some Consumables procured by us and not supplied by the Principal.
Nature of Consumables is in the form of Acid, Lubricants, Packaging Materials etc.
These Consumables are Excisable items.
Rule 6(3) of CENVAT Credit Rules says that separate records should be maintained for the inputs used in manufacture of Excisable Goods, and the inputs used in Job Work; and that CENVAT should not be claimed on the inputs used for Job Work.
This means loss of CENVAT.
Now the query is – Can we (job worker) take credit of CENVAT on the inputs (Consumable items) used for Job Work; and pass on the same to the Principal in the form of Duty in the Job Charges Invoices.
Please comment if this will be a right procedure or not.
14 October 2015
job worker can take the input credit by availing exemption under 214/86 if the final goods are taxable in the hands of principal manufacturer.
Similar issue arose before Tribunal in case of Jindal Polymers Vs. CCE, Meerut-III [2001 (135) ELT 657] where it was held that the job-worker is entitled to cenvat credit on inputs used in the manufacture or processing of polymer/polyester chips on job-work, cleared without payment of duty to the parent manufacturer for manufacture of polyester/polymer filament yarn under notification no. 214/86 as polyester/polymer filament yarn being chargeable to excise duty.
CAclubindia
