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Which procedure to follow to get goods manufactured from job worker?

Central Excise - Started By: - Yatin Bhopi - Dated:- 31-5-2016 Last Replied Date:- 3-6-2016 - Dear experts, We are manufacturing having 3 unit A, B. We wish to do sends goods for job work as below. Unit A will send XYZ product (A s Finished goods falling under chapter 29) to Unit B on payment of duty. Unit B will manufactured product ABC (falling under chapter 39) from XYZ and send it to Job worker. Unit B will also supply some other consumables to job worker or Job worker use his own consumable .....

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it best i.e. Rule 4 5 (a) of CCR 2004, Rule 16 B of Central Excise Rule 2002 or Notification 214 \ 86 CE. Please share your views - Reply By Ganeshan Kalyani - The Reply = Sir, the definition of manufacturing as per Central Excise has to be analysed. If distinct product comes into existence after the process then it is new product otherwise not. Further B has carried out some activity and the resultant is new product classifiable under New chapter heading. This could be final product to outside .....

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By SURESH ASTEKAR - The Reply = Dear Shri.Yatin Bhopi, 1. As rightly stated by you in point No.1, when XYZ product is cleared by Unit A to Unit B, it has to be cleared on payment of duty since from what you say, it appears that Unit A has manufactured the product XYZ out of inputs procured by it which may be something other than XYZ. Here either Rule 4(5)(a) of CCR or job work notification 214/86-CE is not applicable. Rule 16B of Central Excise Rules is only a special provision for semi-finishe .....

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XYZ. Since a new product has emerged from an input, it becomes liable to duty and cannot be cleared without payment of duty under Rule 4(5)(a) of CCR. Of course, if the product ABC is captively consumed within the factory of Unit B itself for manufacture of PQR, you may claim benefit of Notification No.67/1995-CE, provided PQR is liable to duty or is covered by the exclusions provided in the said notification. 3. Notification No.214/86-CE may not be available for clearance of fully manufactured .....

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ker will be manufacturing the goods PQR on behalf of Unit B i.e., the input supplier. The duty paid by Unit B on 110% of the cost of production will be available as credit to the job worker. If the job worker procures further inputs for manufacture of PQR, he can take the credit of the duty paid thereon. If Unit B supplies some other consumables, the same may be supplied to the job worker under duty-paying documents so that the job worker can take credit of the duty paid thereon. 4. When job wor .....

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edure other than mentioned by me? - Reply By SURESH ASTEKAR - The Reply = Dear Shri.Yatin Bhopi, Since product ABC is manufactured by Unit B [out of product XYZ manufactured by Unit A], duty needs to be paid while clearing product ABC. Since ABC is used for manufacture of PQR on behalf of Unit B by the job worker and it is not sold by Unit B to the job worker, Rule 8 of Valuation Rules, which is reproduced below, gets attracted: 8. Where whole or part of the excisable goods are not sold by the a .....

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here the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then,- (i) in a case where the goods are sold by the principal manufacturer for delivery at the time of removal of goods from the factory of job-worker, where the principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the transaction value of the .....

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normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of said goods from the factory of job-worker; (iii) in a case not covered under clause (i) or (ii), the provisions of foregoing rules,wherever applicable, shall mutatis mutandis apply for determination of the value of the excisable goods: Provided that the cost of transportation, if any, from the premi .....

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e. - Reply By surya narayana - The Reply = Dear Friends, In my view, the right procedure is Rule 4(5) (a) of CCR,2004 presuming that the Product XYZ received from Unit A on payment of duty is an input to unit B and avails cenvat and Unit B manufacture ABC by using such XYz and the same along with other inputs ,unit B would be sending for job work and after conversion the Job worker send back the converted product PQR which ultimately sell from Unit B. Best Regards Suryanarayana - Reply By SURESH .....

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B. Therefore, provisions of Rule 4(5)(a) will not be applicable. Another fundamental point to be considered here is that incidence of duty of Central Excise is on the act of manufacture and the moment any goods come into existence as a result of manufacture , duty becomes payable, although its payment / collection is deferred to the point of its removal. It may be noted that even if any excisable goods emerge within the factory of manufacture and are captively consumed for manufacture of other .....

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