Excise Duty on Capital Goods

[Ashok Chopra]

Respected Forum,

1.    I am 100 percent EOU at place A.  as manufacturer and also Powder Coating Unit at Place B. as  Service Provider

2.   My service tax registration is one, both the places are shown in Registration and Nature of Services mention as GTA for manufacturing Unit.   And for Powder Coating Nature of Service is mentioned as Business Auxillary Service.

3. I am filing one Service Tax Return and Balance Sheet is one.

4. After getting my unit of Powder Coating registered in Service Tax as B.A.S , I have taken credit of CENVAT on capital goods for Powder Coating Machinery.

5. I was receiving auto parts from various vendors and sending back duly powder coating (powder i was purchasing from market and also taking CENVAT credit on the purchase of powder.

6. I charged service tax from the parties approximately two years and stopped in July, 2013 as i was asked by our vendor that they are charging excise duty from their OEM on the product being Powder Coated by me.

7. Now i have given entire plant and machinery, land and building  on rent to some one else.

My queries:-

1. I am being  asked by Central Excise Officer during audit of my EOU unit that my Powder Coated Plant is not registered with Central Excise and registered in Service Tax Only, Wrong credit of CENVAT has been taken by me on Plant and Machinery and Purchase of Powder.

2. He is also asking Powder Coating is not my JOB Work Income, it will be considered as manufacturing.

I shall be thankful, if any one will guide me accordingly and will provide me supporting notification/clarification/circulars to show to my management.  He is insisting me to deposit the CENVAT credit taken by me in CASH.   What should i do?.  Please guide me accordingly.

Thanks and regards

AI Summary

Dispute Over EOU's Powder Coating Plant: Excise Registration and CENVAT Credit Under Scrutiny, Manufacturing vs. Job Work Debate An individual operating a 100% Export Oriented Unit (EOU) and a powder coating service is facing an issue with the Central Excise Officer regarding the registration and CENVAT credit on capital goods. The officer claims that the powder coating plant should be registered under Central Excise, not just Service Tax, and that the CENVAT credit taken on plant, machinery, and powder purchases is incorrect. The officer also suggests that the powder coating activity should be considered manufacturing, not job work. A respondent advises that if the vendor sends materials under Notification no. 214/86, the job work is exempt from excise duty.