Pradeep Jain - Chartered Accountant

Dear Sir, We are manufacture of Beverages Product. We have sent some material (Resin i.e preform of preform) directly from supplier premises to Job worker premises, Job worker after processing (pet preform )that material, will send directly to us. On this material supplied by job worker we will do some further process and used it in packing (As a plastic bottle) of dutiable final product. I want to know that how job worker will raise his Invoice i.e. whether he will charge excise on total value of material or will charge excise on job work amount or he will charge service tax on the same. At the same what will be the treatment of excise charged by our supplier on his invoice which is named on us. Thanks in advance for your kind consideration. Reagrds Mahendra Modi

On reading your query we came to a conclusion that the job work that is being done on resins which is an intermediate process that facilitates in the manufacture of your final product. If your final product is dutiable then you can send the goods under Rule 4(5)(a) of Cenvat Credit Rules, 2004 or under Notification no. 214/86-C.E. dated 25.3.86 as amended. If you follow this procedure then there is no need to pay excise duty by job worker. But if your final product is not dutiable then the leviability of excise duty on such intermediate process depends on the fact that whether goods produced by the job worker amounts to manufacture in terms of the provisions of Central Excise Act, 1944 or not. If the process undertaken by the job worker amounts to manufacture, then excise duty is payable by the job worker as per the provisions of Rule 10A of the Central Excise Valuation Rules otherwise the service tax will be applicable. It is also subject to exemption contained in serial number 30 of Mega exemption notification no. 25/2012-ST dated 20.06.2012 which is to be checked at your end.

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