Excise valuation in case of jobwork.

This query is : Resolved

TaxIndia (Querist)
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04 June 2012 Respected Members.

When the brand name owner subcontracts the goods to jobworker , the jobworker is under obligation to deposit duty on the basis of MRP displayed on the product.

However,kindly confirm that in case of NON MRP products the jobworker should pay duty on :
1. Value at which invoicing is done by Jobworker.
2. Value at which invoicing is done by Principal owner to end customers.

Thank you very much in advance.

Rgds

Hitendra Jain

Hitendra Jain (Expert)
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05 June 2012 Wherever goods are manufactured on job work basis, their value would be determined in terms of the provisions of rule 10A subject to fulfillment of the requirements of the said rule. Rule 10A(ii) stipulates that the assessable value, in the cases where the job-worker transfers the excisable goods to the Depot/Sale office/Distributor and/or any other sale point of the principal manufacturer, shall be the transaction value on which goods are sold by the principal manufacturer from such a place.

You may also refer Circular No. 902/22/2009-CX dated 20.10.2009

NILESHKUMAR

NILESHKUMAR (Expert)
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06 June 2012 You have not mentioned the proces of job work, whtehr goods are directly clered from job workeror returned back to principla and how your principla is utilising job worked goods. however we try to clarify your query as follow.

In case of Job Work Valuation if the principal is selling goods to market valuation of Job Work goods to be done as per Rule 10 A of Central Excise Valuation Rules, 2002 but Honerable Supreme Court has allowed Appeal in case of Inspart Industries V/s. CCE 2006(202) ELT561 SC where Job Worker is also engaged in manufacriong and selling identical goods to open market and the transactiona value of the job work sale price is the price at which job worker has clared the goods to market, no need to follow Rule 10A of Valuation Rules.

The view taken by Honorable Cestat in case of Rolastar Pvt. Limited V/s. CCE Daman reported vide 2012 TIOL-23-CESTAT-AHM/2011 dated 28.4.2011 . The value of Job Worked goods will be cost of raw material supplied by the Principal and job charges including profit of the job worker. when the job worked goods and cleared to principal and the goods are captively consumed by the principal, there is no applicability of Rule 8 or Rule 10A of valuation Rules. It was held that the valuation of job worked goods to be assessed on the landed cost of material+job charges+notional profit.

Thanks
NILESHKUMAR BANKER
B.COM, LLM, MBA (FINANCE) , ICWA
CONSULTNATS AND ADVOCATES,
C.EXCISE, CUSTOMS, SERVICE TAX, EXPORT IMPORT AND FOREIGN TRADE POLICY

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