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Applicability of excise on job work

ravi mittal (business) (36 Points)

28 April 2009

Dear All,

My company is a VAT Dealership (non-excise). I buy certain material and get the job work done on that product and then sell the product. The Sales Tax authority (Andhra Pradesh - VAT) has no problem with a dealer getting job work done, as it permits this work with prior application for the same. Now, since I am not registered under excise and nor is the company doing job work under excise, will my turnover above 1.5 crore, lead me to compulsarily register under excise?

Please suggest.

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17 Replies

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 28 April 2009

Central Excise duty is on the manufacturer. Job worker is the manufacturer in this case (if the process of job work amounts to manufacture). Liability of duty payment is on him. It has nothing to do with your turnover- the job worker has to see his turnover, when that exceeds 1.5 crore, he may be liable to pay duty.

Further, if the job work does not amount to manufacturer, service tax under business auxiliary service is attarcted.

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ravi mittal (business) (36 Points)
Replied 28 April 2009

Originally posted by :Rajesh Kumar
"	Central Excise duty is on the manufacturer. Job worker is the manufacturer in this case (if the process of job work amounts to manufacture). Liability of duty payment is on him. It has nothing to do with your turnover- the job worker has to see his turnover, when that exceeds 1.5 crore, he may be liable to pay duty. Further, if the job work does not amount to manufacturer, service tax under business auxiliary service is attarcted.	"

Hey Rajesh!

Thanks a ton for the clarification!

However, I have a small doubt. What would be the base of the jobworker's turnover? The jobwork price only or the price of the goods+the job work price?

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 29 April 2009

It will be cost plus job charges value.

Further, your job worker may be doing job work for other suppliers also, he has to calculate his turnover based on job work done by him for all parties.

If service tax is payable, it will be on job charges only.

Ram kr. (Buisness) (883 Points)
Replied 02 May 2009

Dear Sir,

We have service receiver and pay service tax on GTA, BAS,Rent and Royalty etc. We are also doing job work and raise Job work Invoice. Can s.tax liability arise on this job work invoice. Thanks

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 03 May 2009

It may if the job work done doesnt amount to manufacture and and the job work is not done under Cenvat rule or notification 214/86.

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Ram kr. (Buisness) (883 Points)
Replied 05 May 2009

Dear Sir,

Which type of job work is not done under cenvat rule or notification 214/86.

Thanks

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 06 May 2009

There may be situation that the person who is sending you raw material for job work is not paying central excise duty. In that case, job worker has to take care of central excise duty/service tax.

ADITYA (Manager Finance) (742 Points)
Replied 06 May 2009

We are Manufacturer and also doing Job Work for other. We are paying Excise Duty / Service Tax as the case may be.

Our query is that when we are getting material for Job Work under Rule 4(5) a , there is exemption under Service Tax & Excise Duty Liability is with the sender of goods.

In such cases of Job Work, whether proportionate CENVAT CREDIT IS TO BE REVERSED ?