Job work and molding charges and reakted tax issues

[Suvarna Kumar]

We are 100 percent EOU and if  we sent PP mats  to Job work for rubber packing . In this case Job worker using their own backing compund .The backing compund materilas is not an duty releated materials and they billing us molding charges PP mats . In this case central excise have any objection ?

PP mats is 100 percent EOu products and Job worker make this as rubber molded PP mats .

Job worker need to pay service tax or any other charges for this work.

Please clarify

 

[PAWAN KUMAR]

As per my view, service tax would be charged as you have told that eou unit sent the raw material to job worker and the job worker processed the raw material by using their own material. The service which the job worker did, falls under Works Contract Service, where transfer of property in goods involved. Therefore service tax would be leviable.

[Suvarna Kumar]

^{Dear Sir ,}

 

. We are sending Semi finished Poly proplylne mats for rubber backing . We are sening only poly propylne mats . The Job worker using thier own rubber for backing this product . In this case .How to Billing and Job worker face any taxes . Is thier any rules to purchase the rubber compund from job worker and hand over them for backing . What are the real procedure for this type of Job work  

 

[PAWAN KUMAR]

Dear Sir,

As per my understanding there are two options, 1. the job worker sell the material to you and you in turn provide the same to use into your job work. In such case, all the materials will be in your possession and job worker will only charge the job work charges to you for which he can claim exemption under mega exemption Notification No. 25/2012-ST S.no.30 (c).

[Suvarna Kumar]

Dear Sir

In this case if we purchase the raw materails from Job worker . Raw materails name Rubber compound. Can you please explain the taxes they need to mention in rubber compund sales to us .

As per   mega exemption Notification No. 25/2012-ST S.no.30 (c)..Where this details mentioned.

Also we are waiting to hear from 2nd option .

AI Summary

Works contract service may attract service tax when a job worker uses its own materials; sale-plus-jobwork may enable exemption.
When a 100% EOU sends semi finished polypropylene mats to a job worker who uses the job worker's own rubber compound, the processing falls within Works Contract Service and service tax is likely leviable. Alternatively, if the job worker first sells the rubber compound to the EOU and then performs the backing as job work, the job worker's job work charges may qualify for exemption under the mega exemption notification, subject to its conditions.