Excise Invoice, Central Excise

[Pradeep Kaushik]

Respected All,

We supply some our components to our supplier on job work challan, and our supplier also add some more component to prepare one complete assembly.

Suppose the value of our components is Rs. 65.00 and the value of components added by our supplier, is Rs. 75/- including his labour. While making the Excise invoice to us, on what amount he will charge the excise duty ,on 75/- or including our cost also i.e. 135/-. and our cost will be deducted from the gross Invoice Amount.

please explain the process as per Excise guidelines.

Pradeep kaushik

 

Posts / Replies

[Pradeep Khatri]

Excise duty will be paid on Rs. 140/- as the material supplied by you will also be added in the assessable value while computing the central excise duty.

[Pradeep Kaushik]

Pradeep Ji,

Thanks a lot for the advice.

Please provide the Excise rule/ notification, under which this can be varified.

Regards.

Pradeep Kaushik

[Naveed S]

With due respect, i am of the view that if components are supplied on a job work challan, then the same are assumed to have been cleared and removed from your factory premises wthout reversal of cenvat credit.

Therefore, the said component (assembly) are also now required to be cleared by the job worker under a job work challan, so as to adjust the jo work challan entry in the job work register (Ann-IV and V). Simultaneously, the job worker shall have to prepare Excise invoice of Rs. 75/-.

If the job worker  wants to charge total price of Rs. 140/- at the time of clearance from job worker premises, then the components are required to be removed by you under Excise invoice and on payment of excise duty. Tnen only, the job worker shall raise excise invoice of Rs. 140/-, for whcih you can avail total cenvat credit (for reversal done at the time of clearance to job worker and for credit invovled for the payment made to job worker).

So, it is upto the manufacturer to adopt whatever procedure he deems  fit ..

[R.S. Mangal]

It is settled legal position that the job worker is treated as manufacturer and the liability to pay duty is fastened upon him unless the Exemption has been claimed under CE Notification No 216/86 or under CCR Rules or under CE Notifications No 83/94 and 84/94 as the case may be.

In case the  exemption has not been availed the duty has to be paid on the transaction value of similar goods on the same date or  any nearest date on which the raw material suppliers sells the goods.Therefore, broadly  the duty is paid on market price of such goods.

[SI Group India limited]

Excise duty will be charge on total value of components: (pl refer Rule 6 of valuation rules and cir. no 619/10/2002-CE 19.02.2002 wherein it is clarify that the assessable value would be the job work charges plus the cost of the materials used in the manufacture of the item (including the cost of the materials supplied free of cost to the job work

cost of components supplied by you      65.00

cost of components added by supplier    75.00

                                                          ----------

                                                          140.00

                         Excise duty 12.36%     17.30

                                                          ---------

                                         CST 2%       1.85 (140+17.30-65)*2%      (if applicable)

                                                          ---------

                           Invoice value               159.15  

 

Regards

Yatin

[R.S. Mangal]

After insertion of Rule 10A in Central excise Valuations Rules in year 2007, the position will be as I have explained. For sake of convenience , I reproduce the relevant rule--

Notification No. 9/2007-CE (NT) Dated 1/3/2007

 “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.”

The theory of paying duty on job charges plus cost of material was valid upto 31.3.2007 only.

[S Ganesh]

If goods are sent to the subcontractor under 57f4 challan, we wont pay any duty if goods are received back within 180 days. Then, the subcontractor should charge duty on material supplied i.e. material bought the SC from third party and labour charges incurred by him.