Whether service tax is applicable for Jobwork transactions (Between 100% EOU & DTA Unit):
1) We (100%EOU),will supply the materials to the Jobworker(DTA Unit) for Conversion Work and on completion of the work, they will return the finished goods. 2) Jobworker will raise processing bill for the jobwork. 3) Recently the excise authorities raise the above issue in another unit like us and requests to pay the ST on all kind of this jobwork transaction. 4) Is there any specific rule to charge the ST on Jobwork between 100% EOU and DTA Unit? Thanks in Advance Varathan
12 August 2009
Under BAS processing NOT amounting to manufacture is liable for service tax. In your case of conversion of A inot product B there is no question of ST. The only possible liability is Central Excise.
13 August 2009
Thanks for your immediate reply. We request your clarification on ST Notification No 8/2005 dt.1.03.2005 reg exemption of taxable service of production of goods on behalf of client referred in sub-clause (v) of clause (19) of sec.65 of the Finance Act Explanation- (ii) “appropriate duty of excise” shall not include ‘Nil’ rate of duty or duty of excise wholly exempt. -what it means? We (100% EOU) are moving the goods by way of In-Bond, (i.e.) exempted raw materials to the job worker (DTA Unit) for part production of our goods. The same is returned back to us for further processing at our factory, meant for export.
Jobwork details- we give PP woven Fabric and PPC Granules for Lamination work (both are covered under the same CEX chapter heading 39269080).
Does this transaction is attracts Service tax? Please Clarify. Thanks in advance
19 August 2009
Pl let us know the actual process for determining whether manufacture exists? Further under BAS textile processing is exempt under Not 14/2005.
19 August 2009
Thanks. our Jobwork is as follows: We give PP Woven fabric and PP Coating granules for lamination work with the jobworker( Chapter Head 3923-both items). On completion of jobwork(lamination work), the said goods are returned to us for making PP Woven Bags(chapter head-3923), meant for exports. All the above are moving under In-bond, without duty element,since we are a 100% EOU.
During the recent audit, the authorities are demanding the service tax for this transaction. Is there demand is correct or not? please clarify ? Thanks
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