Job worker- manufacturer

1008 views 3 replies

Mohit Sharma

25 Points Joined October 2011

Dear All,

Recently we engaged one job worker to whom we will supply the material and he will assemle the same and to some extent he will use his input also to complete the Job. After that he will send back the same to us and here in our factory the same assembled material passes the test process and after clearing it will be sold to customer.
My question is
(1)Even though some testing is pending from our side, can we say the process done by the job worker is manufacturing process and he have to charge Excise Duty as per Rule 10A Valuation?
(2) And if we say this is not manufacturing process and we receive final material in our factory, Can job worker transfer Cenvat related to input used by him if yes than how?
(3) If we say that Job worker done manufacturing for us, and we remove the material NT 214/86 from job worker premises, Can job worker transfer Cenvat related to input used by him if yes than how?

Please give your expert opinion on the same

Replies (3)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

you can follow any one set of procedure

1) clear the goods from your factory to job worker under notification no 214/86 or Rule 5(a) of cenvat credit rules 2004, and receive the same to your premises after PURE job work , receikve the invoice of inputs used seperately and cenvat paid, - you are eligible for input credit on seperate invoice, on which duty is paid.

2 send goods to job worker on INVOICE after paying / reversing duty, job worker is free to add his inputs and it would amount manufacture at his end, he will clear the goods to you on full value and full duty payment on invoice, - you are eligible for full cenvat credit ( vat rules are to be considered seperately)

3) in absence of above two process clearly and distinguished,. the input credit at both ends are barred, and the materials value will be paid by cash / PLA only.

Mallikharjun

Deputy Manager

304 Points Joined June 2011

1. If it is a pure job work, you can transfer the goods without payment of duty under 214/86. But it attracts service tax. To avoid service tax, you need to intimate to the service tax department that your final product is excisable and hence the job worker need not pay service tax.

2. If it is semi bought out, means, you supply some parts and job worker adds some parts and he will send the product to you, then you need to clear the material to job worker after payment of duty. He will take credit and sends you with Excise invoice. You can take credit.

3. If you want to remove the goods directly from the job work premises, you have to take permission from AC/DC under Cenvat Credit Rules. You are eligible for taking cenvat credit in this case.

Mallikharjun

Deputy Manager

304 Points Joined June 2011

Rule 4(6) of Cenvat Credit Rules, 2004 - The ³³[Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be,]³³ having jurisdiction over the factory of the manufacturer of the final products who has sent the input or partially processed inputs outside his factory to a job-worker may, by an order, which shall be valid for a financial year, in respect of removal of such input or partially processed input, and subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid, allow final products to be cleared from the premises of the job-worker.