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Document eligible for ccr to jobworker

18 July 2012

Hi, can anyone provide a light with the excise provisions that on which documents a job worker is eligible to take credit on the value of raw materials supplied by principal manufacturer?? 214/86 is not available to the job worker so he is required to pay the duty on goods manufactured by him.. but in the light of some judicials he is eligible to take credit of value of raw material supplied by manufacturer... The querry is manufacturer despatch the goods to JW on challan.. & under Rule 9 of CCR invoice is the eligible document for claiming the credit...

So on wt documnet basis JW claim the credit?

Please support wid Rule, circular, notification under excise law ....URGENT

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14 Replies

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 18 July 2012

There are many angles in this case. You need to dissect each angles very minutely to find that whether JW will be allowed credit on the Inputs or not? 1) Whether the activity carried on by the JW can be said as manufacture, needs to be checked with the specific tariff heading of the product. 2) If it is not a manufacture activity then CENVAT Credit on inputs will not be allowed. 3) If it tentamounts to manufacture and where the principal manufacturer pays the Ed on the removal of the product to the JW then, the principal manufacture has to raise an Excise invoice to pass on the credit. 4) For availing credit on input, there has to be a proper Excise invoice or else CENVAT credit will not be allowed.

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vanisha mittal (CA) (88 Points)
Replied 18 July 2012

Mr Ajit, job worker manufactring the goods n seperate tarif is there... principal mfrer manufacture exempted goods, hence JW required to pay the duty. & as per judicials JW can claim the duty. but now the ques is on wt documents CCR available to JW.. manufacturer sending the goods under despatch invoice..

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 18 July 2012

Please clear me on this "principal mfrer manufacture exempted goods, hence JW required to pay the duty. & as per judicials JW can claim the duty" If the product is exempted under CETA, then from where the question of claiming the duty by the JW comes. Kindly elaborate.

vanisha mittal (CA) (88 Points)
Replied 18 July 2012

Mr ajit the goods are not exempted in CETA bt is exempted via notification, hence manufacturer is not required to pay duty on final product.. though the JW is not descharged frm duty liabilty via N/N 214/86... so he is required to pay the duty on the product manufactuer under jobwork, & can claim the CCR on goods received by him frm manufacturer.. bt wt shuld be d documents on which he can claim the CCR..

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 19 July 2012

If on the final product no duty is payable vide exemption notification then the JW has to charge service tax for the job done and not ED. For claiming CENVAT Credit on inputs duty has to be passed on by the manufacturer else credit will not be allowed.

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vanisha mittal (CA) (88 Points)
Replied 19 July 2012

Mr Ajit, If a manufacturer is making exempted goods then he cannot claim credit of inputs, now the manufactrer remove the goods under depatch invoice to the jobworker then JW can claim the cenvat credit on the value of raw material because he is paying the duty on the final product manufacture by him under job work.... because the manufacturer is making the exempted goods so job worker is not discharged frm duty liability by manufacturer under 214/86.... Now can u suggest me for the querry...

JW paying the St on job charges etc.. is not an issuue in the querry

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 19 July 2012

"Remove the goods under depatch invoice to the jobworker" mean what? Please clarify. Is it semi finished good or the raw material as such? If it is a semi finished product then look for the tariff head under which it falls.

vanisha mittal (CA) (88 Points)
Replied 19 July 2012

"Remove the goods under depatch invoice to the jobworker" means the raw material removed under the cover of challan.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 19 July 2012

Let me thank you for bringing such a unique transaction on open platform. By now it would be clear that credit cannot be passed on via despatch challan. Now in the said situation you can instruct the supplier to bill for the material to the manufacturer but the consignee would be the JW. Now as the material has been received and used in the factory or premises of the JW in the process of manufacture, CENVAT Credit will be allowed on the same as inputs. You can take credit on the same via the excise invoice raised by the manufacturer on the raw materials used in the production process of the JW.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 19 July 2012

when the principal is not manufacturing exisable goods, means he is not at all eligible for any input credit, and as he is not eligible for input credit, he can not pass on to JW by whatsoever document.

if the principal want to avail the input credit through JW, then he has to purchase goods direct in name of JW, only then the JW can be able to avail input credit.

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rimimik (internet) (25 Points)
Replied 20 July 2012

HI,

Thanks for shareing this information........

rimimik (internet) (25 Points)
Replied 20 July 2012

thanks for share this info.

vanisha mittal (CA) (88 Points)
Replied 20 July 2012

Mr Ajit, manufacturer of raw material cannot be instruct to raise the invoice in wich JW is shown as consignee.. then wt to do? if manufacturer of exempted goods cleared the goods as such to the JW then wt documents will support to pass on the credit to the JW?

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 21 July 2012

If you want to avail the CENVAT credit on inputs then the raw material has to be sent as a consignee so that the material is received directly to the consignee's factory and not the manufacturer's premises, else you will not be able to take the credit on the same.