Job work valuation

This query is : Resolved

sekhar (Querist)
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30 December 2009 Dear Sir,

Please give me some information regarding the job work sales valuation. we were doing job work. in the job work we are receiving raw materials from supplier, and we were taking input excise on job work material received to us. Now we are sending the material after doing job work, what would be the assessble value for paying excise duty? Ex. We have received 10.000mt @ 53000/- valued Rs.530000/- it is landing cost to us and in this we have taken input excise duty on assessble value of Rs.350000/- Now what is the value to be calculated it is landing cost plus job work charges plus profit or input excise duty assessble value plus job work charges plus profit. kindly give me your opinion and also give me suggestion about service tax. in the above case we had already paid excise duty on despatched materials. after completing the order of job whether we have to pay service tax on the total order or not? if job work charges Rs.10000/- per mt, we have to raise commercial invoice for fabrication charges for Ex.500mt x10000-=50,00,000/- it is taxable service or not?

kindly give me your opinion

SANJAY JAIN

SANJAY JAIN (Expert)
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30 December 2009 The facts are not clear in your query. So as the facts suggest, assuming that you have taken CENVAT credit of duty paid on raw material supplied by the principal manufacturer.

In this case if credit has been taken, the cost of raw material would be taken excluding credit amount. Means to say while computing assessable value to pay excise duty at the job worker end, the CENVAT credit amount which has been taken by the job worker, would not be part of assessable value.

As the goods are being returned to principal manufacturer on payment of duty, the case is not covered under the sub clause (i) or (ii) of Rule 10A, so the goods shall be valued under Rule 11 on the basis of reasonable means.

In this manner the landed cost plus job charges will constitute assessable value and as far as concern for profit margin, it is not liable to be shown separately as this is the forming part of job charges.

In the above, the query may be introspected accordingly.

Or otherwise what is need for involving in the valuation, observe the procedure of Notification No. 214/86-CE.

Regarding service tax, please note that when the goods is liable to excise duty on the stance of carrying out manufacturing activity, the service tax is not payable. Logically one of two levies shall be charged at one transaction. If there is liability for excise duty, the service tax is not payable.

For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).

Kishanlal Paliwal

Kishanlal Paliwal (Expert)
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02 January 2010 Dear Sanjay Sir,

In the given case, the principal owner provided material to carry job work on it, so in my oipnion, it would attract ST rules.

Whether the job worker taken CENVAT credit for duty and cleared goods by the reversing the CENVAT is correct or not where he raised seperate bill for job charges only since he revesed cenvat already on processed goods.

It would be good enough to kindly guide me.

Regards

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