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Back calculation for assessable value...

sanjiv (Admin) (96 Points)

13 November 2011

I came across a back calculation of a job worker for determineing the assessable value, here it is

Tender price - 217391

Less Loading/unloading- 250

217141

Transportation- 0

Less Excise Duty on Raw Material 16587

200554

Less Vat @ 15% 0

200554

Less Excise @ 10.30 18728

Duty Payable on- 181826

What i am concerned about is why has he debited the amount Excise duty on raw material 16587...It is urgent , please Help

This job worker is related to principal manufacturer, as well?

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9 Replies

sanjiv (Admin) (96 Points)
Replied 13 November 2011

May i get some help from any of You, on this issue?

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 15 November 2011

the calculation is based on half knowledge based information provided by the participent to the buyer.

how come the buyer can know the raw materials input credit amount?

they are unware of the excise regulations and making adjustment without adequate knowledge.

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HS Negi (Senior Executive- F&A) (590 Points)
Replied 16 November 2011

I did not understand the matter also.

Regards

HS Negi

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sanjiv (Admin) (96 Points)
Replied 18 November 2011

Sir

Here The Job Worker mentioned is related to Principal manufacturer....

Principal manufacturer supplies the raw material to Job Worker.....Job worker does the Conversion work,

From Job Worker finshed goods are sold to Principal manufacturer, in above mentioned calculation sheet they clear the goods at the rate of 181826 (Duty payable on)

Job worker takes the credit on raw material supplied by Principal manufacturer, uses that credit while clearing the finished goods as well, and debit that cenvat credit on raw material , while coming to dutiable vale,. Are not they taking dual benefit....can they debit that cenvat credit on raw material , while coming to dutiable vale.....

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 18 November 2011

Originally posted by : sanjiv
	Sir Here The Job Worker mentioned is related to Principal manufacturer.... Principal manufacturer supplies the raw material to Job Worker.....Job worker does the Conversion work, From Job Worker finshed goods are sold to Principal manufacturer, in above mentioned calculation sheet they clear the goods at the rate of 181826 (Duty payable on) Job worker takes the credit on raw material supplied by Principal manufacturer, uses that credit while clearing the finished goods as well, and debit that cenvat credit on raw material , while coming to dutiable vale,. Are not they taking dual benefit....can they debit that cenvat credit on raw material , while coming to dutiable vale.....

the whole process done is not as per excise laws, job work is not a manufacturing, hence excise is not applicable, notification no 214/86 should be followed.

if excise is charged, then its not job work, but manufacture, hence at point 1 the party A sold ( sent) goods to party B, and after taking cenvat credit, party B produced certain goods and sold back to party A,

Party A and B both has to issue "invoices" for movement of goods.

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sanjiv (Admin) (96 Points)
Replied 18 November 2011

Sir

Here principal unit ( lets call it "A") (service tax registered unit, -enters in works contract agreement for turnkey project)

->purchases raw material as a buyer, but gets its delivered to associate concern (The Job worker)(lets call it "B") as a consignee as mentioned on purchase invoice.

-> B does the conversion which amounts to manufacture,pays the excise duty for clerance, issues sales invoice to A

My question is

1.B uses credit availed on input, while clearing the finished goods , and debits that cenvat credit amount on raw material , while coming to dutiable vale,as well.. Are not they taking dual benefit...?.can they debit that cenvat credit on raw material , while coming to dutiable vale....

2. Should not they be coming to dutiable value as Valuation Rule 10A sub rule II as per the Circular No. 902/22/2009-CX, dated 20.10.2009, not rule 4 or 4A?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 19 November 2011

under the above circular, the inputs supplied by the A ( principal) is complete chasis and its not used as input but body is built on that chasis, hence the body builder does not take credit.

A has purchased the inputs and transfered to B, so unless the excise invoice represent the B as buyer (which he is not) input credit is not available to B.

as reflected with your query, B is the deemed manufacturer, he will charge ED on the gross clearance value, without considering the input credit on the inputs supplied by A, coz A has not followed the rules of job work in any means as prescribed under central excise.