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JOb Work

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)

09 October 2009

According to CENVAT Rules whenever a manufacturer sends certain raw materials to a Job worker for some processing, the said material must reach back into the factory of manufacturer within 180 days . Otherwise amount equal to CENVAT involved have to be paid till the time the goods/ material comes back. Rule 4(5)(a).

My query is:

If the Raw Material is sent to the job worker directly from the supplier and not from the manufacturer. What would be the implication of Rule 4 (5) (a) in this case Viz; regarding 180 days ?

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5 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 09 October 2009

I am not an expert in this but still place my views if the raw material is supplied by supplier directly to job worker for manufacture of Branded Goods the thing is in the Invoice of the supplier should be like this sold to Manufacturers Name and consigned to Jobworkers Name such Incorporation is essential for 52A Invoice.In the first case sending material from Manufactureer to Jobworker is governed by 57F4.On both the cases 180 days is allowed for rectification and return

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 10 October 2009

The manufacture is entitled to credit when the raw material is received at the place of job worker. The material should come back within 180 days from the date of credit.

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
Replied 15 October 2009

in the above situation when goods aree traveling to job worker directly ----- the manufacturer is making the entry of CENVAT on inputs at the time he finally receives the semi finished inputs/goods from job worker ----- is it right ?

hanamshet (CONSULTANT) (176 Points)
Replied 16 October 2009

The manufacturer has to issue 4(5)(a) challan as soon as the goods sent directly to job worker reach the job worker's factory. He can take the credit of duty only after he receives the processed inputs along with the invoice under which the goods moved to the job worker;s factory. The question of receipt of processed goods within180 days does not arise since cenvat credit is not availed at the time of sending the inputs to the job worker.

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 20 October 2009

@ Jeevesh- it is right.

challan is required if the manufacturer has taken credit (if challan is not issued, the raw material balance will be more than actual). However, if no credit is taken when the goods are received at job worker end, and it is taken only when the goods are finally recived, no challan is required.