Pre-casting slab, Central Excise

[Arunachalam siva]

Sir,

We are setting up a factory. We have a plan to send cement and TMT rod to third party(situated outside factory) for making concrete slab (called pre-casting slab). Pre-casting slab will be used in civil construction(building factory).

Pls provide any clarification in the following situation:

1. Such third party is not falling under preview of excise/service tax.

2. Third party is provider of output service and paying service tax for output service but not falling under excise preview.

Posts / Replies

[Rajagopalan Ranganathan]

Sir

The process of pre-casting cement slabs amounts to manufacture under Section 2 (f) of Central Excise Act, 1944. Therefore no service tax is payable. Only central excise duty is payable. In your case since the slabs are manufactured by the third party only such third party is liable to pay duty subject to SSI exemption contained in Notification No. 2/2003-*CE dated 1.3.2003 as amended.

[Arunachalam siva]

Thanking you sir for valuable reply. I like add the below to give more clarity my case/issue.

In our case, we will supply cement and TMT rod to such third party for making concrete slab. Third party will add aggregate(stone, sand & water) and makes slab. Such slab will be returned to me and i will use that slab for my factory building.

In this case, we may be called as owner of material and third party is job worker. So liability of excise duty may fall on us only if we sale it to another party. we are not manufacturer/seller of slab.

in our case, excise duty may not be payable as slab will be used in our factory only.

Please i need more clarity to handle above case...

[Rajagopalan Ranganathan]

Sir,

In lot of cases Supreme Court of India has held that raw material supplier is not the manufacturer by the person who engaged actually in manufacturing the excisable goods is the manufacturer. Therefore in your case though you supply basic raw materials, namely, Cement, TMT rods etc., the person who actually manufactures the cement slabs is the manufacturer. Therefore he is liable to pay duty.

[Arunachalam siva]

Sir, That party is not manufacture of slab and party is going to do this activity only for based our special requirement. Moreover. And also is service provider and paying service tax but not having ECC as not manufacturing any product

[Ganeshan Kalyani]

Should you need to check SSI exemption limit. manufacturer is exempted from excise duty liability if the turnover is less than 1.5 crores and service tax limit is 10 lacs.