Cenvat Credit, Central Excise

[vikram singh]

Dear Experts,

                    I have some confusion related to job work and excise. I have a query that there is our two units (e.g. A and B) A send the material to B for job work and same B return back after job work. In this case I want to know the treatment for excise at the time of material purchase by A ,sent to B and return back  by B. and what are the treatment for cenvat credit.

Regard

Vikram Singh

Posts / Replies

[SHYAM ROY]

If A and B are units of the same Company (with the same central excise registration), there is no issue. But, from your query it appears that A and B are not separate units of the same company, rather they are separate companies. In such case, the specific scenario as mentioned by has been addressed by Rule 4(5)(a) of Cenvat Credit Rules 2004. According to this Rule, unit A will record in a register, the particulars of the materials sent outside to B for processing and shall ensure that the processed materials are taken back into his factory within 180 days. If these conditions are fulfilled, A can send his materials  to B without paying any excise duty or reversing the cenvat credit taken on those materials. However, if such materials are not taken back in 180 days, A will have to reverse the cenvat credit taken in respect of these materials and shall be eligible to take back such credit at a later date when the materials  are brought back to his factory after processing.

S S ROY

[Pradeep Khatri]

We do agree with the reply submitted by Mr. Roy.

[Naveed S]

Yeah, provided Scrap/Rejects if any, are also returned back or cleared on payment of duty by job worker.

[vikram singh]

in above case I want to know that what are the formality have require for unit B in respect to Excise.

[Naveed S]

III. Procedure at job-workers factory :

1. The jobworker will complete the jobwork within a period of 180 days and clear the goods mentioning the quantity and description of the finished goods, quantity of waste obtained and nature of processing. In case of failure to remove the goods within a period of 180 days from the date of removal of inputs etc. from the applicants premises, the Cenvat Credit attributable to the inputs etc., sent to job worker will have to be reversed, failing which penal action may be initiated against the applicant. Apart from this the applicant would also be liable to pay duty on the value equivalent to the value of finished goods intended to be manufactured at the jobworker s premises.

 

2. The goods after subjected to processes should be packed and stacked separately. The packages should be serially numbered and contain batch No. and also should bear the name of the principal manufacturer, i.e. the applicant.

 

3. The jobworker after completion of the process, should send the duplicate copy of the challan mentioning the batch number, serial numbers of the packages kept ready for dispatch.

 

4. The jobworker should also maintain a simple record for the receipt, manufacture and clearance of goods.

[S RAMAN]

Can you please let know whether company B has to get registration from department for doing job work ?? Any returns to be filed with them ??

[Naveed S]

No registration or returns required to be filed by a Job Worker to the department, But they should maintain a record for the job work carried out by them.

However, the applicant intending to do job work with job worker, shall have to make an application to the jurisdictional Deputy/Assistant Commissioner indicating therein (i) details of inputs or partially processed inputs intended to be sent to the job-worker. (ii) name and complete address of the job-worker(s). (iii) registration number and details of the jurisdictional Range/Division/Commissionerate of the said job-worker(s).

Scrap generated, if any, are to be returned back by the job worker or can be cleared from his premises on payment of duty, as per the procedure explained below.

[Naveed S]

IV.     Manner of payment of duty, if leviable, and final clearance:

1. As soon as the principal manufacturer i.e. the applicant receives the duplicate copy of the challan in respect of completion of job-work from the job-worker, he should make necessary entries in the records maintained in his factory.

2. The principal manufacturer i.e. the applicant should prepare an invoice in terms of Rule 11 of the Central Excise Rules, 2002.

3. The said invoice should also contain the particulars of jobworker(s) and his factory from where the goods are intended to be cleared.

4. The invoice should contain the reference number and date of Deputy/Assistant Commissioners permission for clearing the final products manufactured in the jobworkers premises and intended to be cleared from the jobworkers premises.

5. In addition to the above, the invoice should bear the remarks in block letters on the top of the invoice "Removed from the premises of the jobworker M/s. -------------------------------------- as permitted by the Deputy/Assistant Commissioner, Central Excise, Division under F. No ……………………..under Rule 4(6) of the Cenvat Credit Rules, 2004".

6. In respect of removal of the job-worked goods for export from the premises of the jobworker, the manufacturer shall follow the procedure as prescribed under Rules 18 and 19 of the Central Excise Rules, 2002 and Notifications issued thereunder read with instructions contained in Chapter 7 and 8 of CBECs Excise Manual of Supplementary Instructions.

7. The duplicate copy of the invoice should accompany the goods from the Jobworkers factory to the consignee. The applicant may send the original copy of the invoice along with the duplicate copy or through post.

8. After discharging the duty liability, if any, by debit in the account current or in Cenvat account the applicant should immediately send the duplicate copy of the invoice to the jobworkers factory from where the goods are intended to be cleared. For the purpose of time of removal, the time at which the applicant debits the duty is relevant for the purpose of payment of duty. The goods should be cleared on the same day as far as possible and in case of delay, the same should be intimated in writing to the Range officer having jurisdiction over the jobworker.

9. The waste/scrap, if any, generated shall be removed on payment of duty from the job-workers premises in the above said manner or be returned back to the applicant.