Job work/conversion charges

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ramesh vadnala (Querist)
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19 January 2008 We are the mfrs of bulk drugs and doing job work/conversion of raw material to intermediates for others. we are receiving raw material from the party and converting into intermediates in our factory and sending back.
wat is the treatement in service tax,VAT and excise?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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21 January 2008 The central govt, vide notification no.8/2005 dated 1-3-2005, has exempted taxable service of production of goods on behalf of the client referred to in subclause(v) of clause (19) of section 65 of Finance Act 1994 from the whole of service tax leviable thereon.

The aboe is subject to the condition thatgoods are produced using raw material or semi-finished goods supplied by the client for production of goods on which appropriate duty of excise is payable.
(In other words,the goods shall not be 'nil'rated or exempted ones from central excise)

Such production should not,however,amount to manufacture within the meaning of clause (f) of section 2 of Central Excise Act 1944.

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