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Excise on job work

Rajat (India) (76 Points)

21 February 2012

We are a non excisable trader , we are providing raw material to a job worker (who again is non excisable) to process the raw materials and provide us a finished goods(on which there is no branding) . All the inputs are provied by us and the total value of raw material and job work and profit is less than Rs. 1.5 crores per year. In this case are we liabile to get registered with excise or the job worker needs to be registered with excise . Does it fall under the perview of Excise (if the total amount of job work +raw material +profit b our firm is less than 1.5 Cr per month)

Please help

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8 Replies

jogendra (DGM-Commercial) (331 Points)
Replied 22 February 2012

First of all please note that you are not a trader, you are manufacturer of goods and getting it manufactured on job work basis. Yes you are not covered under excise as your value of clearance is less than Rs.1.5 cr. In your case both option is availabile for you either you can clear the all goods upto 1.5 cr under notification No.08/2003-CE or you can pay duty of excise from the 0 value of clearance.

\Both you as well as job worker need not to be registered with excise department

1 Like

vijaya simha P (Auditor and Tax Consultant) (39 Points)
Replied 22 February 2012

In this case you are a manufacturer. since your sale turnover ( exluding VAT ) is below rs.150 Lakhs you need not to registered under Excise. if you want to claim cenvat credit you have to be registered under excise and pay duty from 0.00 turnver. your supplier ( not job worker, the material suppler) should also have Excise registration and then he can transfer the cenvat through gate pass.

But your job worker is not dealing with any goods and just he process the goods on your behalf. in this case he has to charge you service tax under " Business Axilary services". if you get registered under Exciase and if you are paying duty on that goods than he can claim exemption from payment of service tax.

2 Like

Rakshit (practising) (338 Points)
Replied 22 February 2012

The job-worker, in your case, is the manufacturer. The total value of excisable goods(including the cost of material supplied by you) cleared at the factory gate of the jobworker is to be counted towards exemption of Rs.1.5 crores. However, the jobworker is required to file a declaration, under rule 9 of the central Excise Rules,2002, after reaching the value of clearance of Rs. 90/- from his factory.

Advocate Raksh*t Verma

Rajat (India) (76 Points)
Replied 26 February 2012

1. Someone told me that you cannot be a manufacturer without having a factory and production unit.. is that true? AS we dot have any factory of machines , we are just getting job work done, is it ok to do so?

2. If we provide one Input (worth Rs.50 ) the job worker adds and input of Rs.20 and provess the two. Will it still remain job work?
3. Can the job worker process 1.5 Crores worht of goods for 5 Clients and still not register under excise?

jogendra (DGM-Commercial) (331 Points)
Replied 27 February 2012

if you does not have any factory or production, central excise registration will not be granted to you as a manufacturer. if do'nt have ECC, you can not gets the goods manufactured as per Central Excise Rules & regulation.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 27 February 2012

Originally posted by : Rajat
	1. Someone told me that you cannot be a manufacturer without having a factory and production unit.. is that true? AS we dot have any factory of machines , we are just getting job work done, is it ok to do so? 2. If we provide one Input (worth Rs.50 ) the job worker adds and input of Rs.20 and provess the two. Will it still remain job work? 3. Can the job worker process 1.5 Crores worht of goods for 5 Clients and still not register under excise?

job worker would be deemed manufacturer in this case, and his turnover would be calculated with gross value clearances, including the raw materials supplied, he is entitled to SSI exemption of 150 lacs on total clearances from his factory.

Rajat (India) (76 Points)
Replied 27 February 2012

@ jogendra
"1. Someone told me that you cannot be a manufacturer without having a factory and production unit.. is that true? AS we dot have any factory of machines , we are just getting job work done, is it ok to do so?"

//"if you does not have any factory or production, central excise registration will not be granted to you as a manufacturer. if do'nt have ECC, you can not gets the goods manufactured as per Central Excise Rules & regulation.""/

Please clearify weather we can get the job work done upto amount of Rs.1.5 Cr or not without Excise Registration?