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RM send to Job worker for Manufacturing of Finished goods - JOB WORK - Central Excise, Central Excise

Issue Id: - 110610
Dated: 5-7-2016
By:- SNEHAL SHAH

RM send to Job worker for Manufacturing of Finished goods - JOB WORK - Central Excise


  • Contents

Dear sir,

We are manufacturing of Chemical product and we want to send RM to Job worker and get finished goods from Job worker . After that we will sale this finished product to other customers with payment of Central Excise duty .

But we do not want to receive back scrap material from job worker and this scrap material sale to Job worker ( Job worker wants to purchase this for further utilise for manufacturing of FG ) .

Please suggest , what documents require for sale to this scrap to job worker . Job worker also registered with Central Excise , so he also wants to get Cenvat credit on this Scrap materials purchase from principal manufacturer .

Regards,

SNEHAL SHAH

Posts / Replies

Showing Replies 1 to 4 of 4 Records

Page: 1


1 Dated: 7-7-2016
By:- Ganeshan Kalyani

I would like to discuss in the following manner.

The input is sent to job worker by principal manufacuter on the condition that the input credit is availed by the principal manufacuter so as to set off against the excise duty payable on the final goods received from the job worker. Here the job worker has not availed any input credit. It the principal manufacuter who has aviled the credit. The scrap generated is excise if it is marketable and generated out of manufacturing process. The job worker is liable to pay Excise Duty if he is to remove the scrap from his premises. Since he intends to use it further and the final goods out of that would be exciseable (assuming) then no need to pay Excise Duty on scrap used in the process as no input has been used by the job worker on the main input received from principal manufacuter. This is my view. I welcome the views of my Expert colleagues. Thanks.


2 Dated: 7-7-2016
By:- KASTURI SETHI

Scrap generated out of manufacturing process belongs to the principal manufacturer though lying in the premises of job worker. It is the statutory duty of principal manufacturer to pay CE duty on waste and scrap. It is not a case of captive consumption. Since scrap is already lying in the premises of the job worker. The principal manufacturer should issue invoice in the name of job worker giving the reference of job-work challan under Notification No.214/86-CE as amended. Thus the job-worker would be able to take cenvat credit. Job-work challan is a documentary evidence that scrap is already with the job-worker.


3 Dated: 7-7-2016
By:- Ganeshan Kalyani

Sir, with due respect, I submit that there seems to be revenue neutral. That is, duty to be paid by principal manufacturer on the scrap by charging duty from job worker. And the job worker for the duty paid to principal manufacuter would be taking credit to set off against the duty payable on finished goods that he is intended to produce. However I would go by your reply which is tested and proven and within the framework of law. Thanks Sri Kasturi Sir.


4 Dated: 7-7-2016
By:- KASTURI SETHI

Sh.Ganeshan Kalyani Ji,

I agree with you that it is revenue neutral but procedure has to be followed. No excisable goods can be removed without invoice under Rule 11 of Central Excise Rules, 2002. Waste and scrap are final product as per Central Excise law. By issuance of invoice the requirement of law will be fulfilled and that is an absolutely must.


Page: 1

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