MATERIAL SENT UNDER CHALLON 4(5)(a), Central Excise

[SURYAKANT MITHBAVKAR]

We are registered under Central Excise Act and manufacturing Pharma machinery.

We have avail cenvat credit on electric motor and same motor we will sent to our vendor who is also manufacturing machinery but not registered under Excise Act.

In this process our vendor will assemble the motor with their machine and the same machine sold to us thereafter we will sell the same machine to our customer with our serial number.

While sending motor which nature of process to be declared in Challon 4(5)(a). Also this process is valid under Excise Act.

Posts / Replies

[KASTURI SETHI]

Dear Sir,

"Assembling" is itself a process of manufacture under Section 2 (f) of Central Excise Act. You can write the word 'assembling' on challan. Pl. note the language of Rule 4(5)(a)(ii) of Cenvat Credit Rules, 2004. " or any other purpose". This word is covered under the phrase, "or any other purpose" . Yes this process is valid under Central Excise Act.

There are case laws on this issue where it has been held that 'Assembling' is a manufacturing process. You can easily trace out these case laws.

[MARIAPPAN GOVINDARAJAN]

I endorse the views of Sri Sethi.

[Mahir S]

NO.

The process carried out above is not a valid process under the Central Excise Law.

[Arunachalam siva]

Kasturi sir clarification has written correctly. No doubt on that.

In the subject case, you are sending electrical motor to another party(called as job worker) for assembling under CCR 2004, rule 4(5a) under the cover of challan(format with part-I, II, III) wherein part-I duly filled by you. After finishing the process, job worker has to send the assembled motor to you under challan part-II duly filled by job worker. You have to fill part-III once you receive the material from job worker. You can sale the motor to your customer under the cover of your invoice.

Mr. Suryakant has written as "vendor will assemble the motor with their machine and the same machine sold to us thereafter we will sell the same machine to our customer with our serial number."

Note: you mentioned vendor sold the same machine to after job work. The subject material belongs to you only. Vendor can not sale your material to you.