Hi
I am currently auditing the accounts of a company where in I got a little stuck at the excise point
the company is a manufacturing company.It purchases raw material and pays excise duty on the purchases,the material is then transferred to the job worker who does the processing and converts it into FGs.The excise duty liability on the FGs is paid by the job worker.But as per the manufacturing agreement,the same is indemnified by the manufacturer company to the Job worker.I would also like to mention that that manufacturer company is registered with the excise deptt and is filing nil return.
my query is-isnt the job worker taking a double benefit-it pays excise duty to the deptt. and claims the CCR on its own purchase of raw material that it uses for the purpose of conversion into FGs.also it takes reimbursement of the excise duty paid to the deptt from the manufacturing company.
on the other hand,the manufacturer is the one who is actually bearing the burden of excise duty but at the same time isnot able to take the CCR of the raw material it purchases for transferring to JW coz the depp gets duty from the JW.
The confusion is that the manufacturer is filing a nil excise return,the JW is paying the excise duty on FGs that it produces on behalf of manufacturer.though the manufacturer is indemnifying the JW for this excise duty but it is not claiming the same before the depptt.But then how can the manufacturer claim this exciose duty before the depptt coz from the pt. of view of deptt,duty is coming from JW.I know the manufacturer is doing something wrong,I do not know how to get it rectified?also,the manufacturer refuses to undertake the payment to deptt of excise directly instead of JW coz of teh tedious work involved,help me solve
CAclubindia
