Excise duty

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amit surana (Querist)
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01 August 2012 Excise duty on our excise gate pass is 6%. On raw material and packing material we are paying excise duty at 12%. Therefore there is underutilized balance.

We are doing some work on labour charges basis in which we are receiving all material from that party. After conversion we are sending material through excise gate pass. Excise duty on this material is paid by them and credit is also claimed by them on their raw material.

My question is can we pay excise duty on material send to them as we have underutilized balance and claim refund from them.
They will claim credit on their raw material.

For conversion charges we are raising debit note to the party, in which we are not claiming service tax. Is this procedure followed is correct.

Harsha.H

Harsha.H (Expert)
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02 August 2012 1. as you are Charging 6% ED on your material, you can avail CENVAT CREDIT on the packing materials used by you to dispatch your product outside of the factory. (CENVAT NOT AVAILABLE IN CASE OF 2% WHICH IS CONCESSIONAL RATE OF ED)

2. As you are doing work based on labour charges, if your work amounts to manufacture, then you have to charge ED on the work done by you and remove the goods. You can bill to the vendor inclusive of ED amount.

MATERIAL CHARGED AT 6% AND WORK DONE BY LABOUR CHARGES BASIS, ARE NOT SO CLEAR TO PROVIDE EXACT SOLUTION.

as per as my analysis, i have suggested.

regards,