material sent on JOB WORK, Central Excise

[Harish uniyal]

If material is sent for JOB WORK , is it possible to sent the same material to the end Customer directly,

without taking back .

If yes , pl specify the procedure .

 

regards

Harish uniyal

Posts / Replies

[pradeep khatri]

Yes, it is possible but Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 will be applicable.  Kindly check the Rule 10 A before removing any goods from the jobworkers premises.

[ROHAN THAKKAR]

Dear Sir,

It is possible to remove the goods directly from the premises of the job worker. However, in this regard, following points are required to be considered.

1. An application is requried to be made to the Deputy Commissioner / Assistant Commissioner of Central Excise having jurisdiction over the factory of the manufacturer of the final products who has sent the input or partially processed inputs  to a job-worker. Such application should be made seeking permission for removal of final products from the premises of the Job worker.
2. Deputy Commissioner / Assistant Commissioner of Central Excise will give permission to remove goods from the premises of the job worker after considering the interest of revenue, including the manner in which the duty is payable. [Rule 4(6) of Cenvat credit Rules, 2004]. Such permission will remain valid for a financial year.
3. On receipt of permission, goods can be cleared from the premises of the job worker under the cover of your invoice.
4. However, the valuation will be done as per Rule 10A of Valuation Rules, which has been reproduced for your reference.

 

10A. Where the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then,-

(i) in a case where the goods are sold by the principal manufacturer for delivery at the  time  of  removal  of  goods  from  the  factory  of  job-worker,  where  the  principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the transaction value of the said goods sold by the principal manufacturer;

(ii) in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job -worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of job-worker and   where the principal manufacturer and buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be   the   normal transaction   value   of such goods sold   from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of said goods from the factory of job-worker;

(iii) in  a  case  not  covered under clause (i)  or (ii),  the  provisions  of  foregoing  rules,wherever applicable, shall  mutatis  mutandis apply for determination of the value of the excisable goods:

Provided that the cost of transportation, if any, from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods.

Explanation.-  For  the  purposes  of  this  rule,  job-worker  means  a  person  engaged  in  the manufacture or production of goods on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorised by him.

 

Regards,

Rohan Thakkar

9228720536

[Rangarajan D V]

Dear Sir

Applying Rule 10A for the purpose of excise act will do. however, when the goods are sold from the premises of the job worker, we also need to check the relevant sales tax law under which the tax is to be levied. In circumstances, where

1. principal manufacturer and the job worker are within the same State, then the removal or sale from job work premises shall have to be included in the principal manufacturer's turnover and taxes paid accordingly.

2. where the manufacturer and the job worker are in two different States, and the manufacturer does not have sales tax registration in the State in which the job work is undertaken, the job worker cannot sell the goods directly to the customer, as he has no ownership rights on the goods manufactured. In which case the JW has to return the material, after manufacture, to the PM only, that involves high transportation cost.

Regards

DV Rangarajan

09840995599