Job work exemption

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Rahullakhwani (Querist)
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26 December 2011 If the final product is exempted on account of any exemption notification does the job work done for the manufacture of such final product will be covered by exemption notification no 214/86 ? My view is Yes as the condition under 214/86 is excised duty leviable even on the exempted goods excise duty is leviable...

PAWAN KUMAR

PAWAN KUMAR (Expert)
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26 December 2011 The basic concept which clearly provides that duty is on manufacture. Therefore if manufactured goods become exempted, then job worker will liable for duty in such cases as goods are manufacturing on job work.

Rahullakhwani

Rahullakhwani (Querist)
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26 December 2011 Dear not able to get u...

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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02 August 2024 Under the old excise regime, Notification No. 214/86-CE was specifically related to job work and provided exemptions on the duty payable for goods sent for job work, provided certain conditions were met. Here's how it generally worked:

### Notification No. 214/86-CE

**Key Provisions:**
- **Exemption for Job Work:** Notification No. 214/86-CE provided for the exemption of excise duty on job work for goods sent out for further processing, provided the final products were exempt from excise duty or were used in the manufacture of exempted goods.
- **Conditions:** The conditions usually included that the job worker needed to process the goods and return the finished goods to the principal manufacturer. The principal manufacturer could then be exempt from paying duty on these goods if they were covered under any specific exemption notification.

### Exemption Impact on Job Work

1. **Exempted Final Products:**
- If the final product is exempt from excise duty under any specific exemption notification, the job work done for the manufacture of such exempted final product could still benefit from the provisions of Notification No. 214/86-CE. This is because the exemption typically covered the duty on job work processes, provided that the conditions outlined in the notification were met.

2. **Applicability:**
- **Job Work Exemption:** Notification No. 214/86-CE allowed for the exemption of excise duty on job work where the final product, which was an exempted good, was processed under job work. The exemption applied even if the final product was exempt from duty.
- **Duties:** The job work itself could still be considered for exemption as long as the processed goods or job work performed were subject to excise duty (if not exempted).

3. **Conditions to Fulfill:**
- **Documentation:** Ensure that proper documentation and records are maintained to show compliance with the notification requirements. This includes maintaining records of goods sent for job work and receiving the finished goods back.
- **Filing:** Ensure that all required forms and declarations are filed with the excise authorities to claim the exemption.

### GST Regime Consideration

Under the GST regime, job work is treated differently:
- **Job Work Taxation:** GST is applicable to job work services, and the GST rates vary based on the type of goods being processed. The principal manufacturer is liable for GST on job work services, but they can claim input tax credit for the GST paid on job work services.
- **Exemption Notifications:** Specific GST notifications may provide exemptions or concessional rates for job work services under certain conditions.

### Conclusion

**Yes,** if the final product is exempt under a specific notification, job work done for such exempted final product could still benefit from the provisions of Notification No. 214/86-CE, as long as the conditions specified in the notification are met.

**Ensure Compliance:**
- Verify that all conditions under Notification No. 214/86-CE are met.
- Maintain accurate documentation to support the exemption claim.
- For current GST implications, refer to applicable GST notifications and consult with a tax advisor for detailed guidance.

For accurate and specific advice, especially in light of recent changes in tax laws, consulting with a tax advisor or a professional who is well-versed in excise duty and GST regulations is recommended.