Galvanising on Iron and steel article under job worker challan

[Moksh Ari]

Hi

We are receiving Iron and steel article for galvanizing purpose under job worker challan, we are using Zinc procured by us and melting in iron kettle manufactured in our factory.

Excise and service tax registration are also obtained since involved in manufacturing of galvanized plant and kettle for heating Zinc.

Here following aspects are involved:

a) Galvanizing iron and steel received under job worker challan in our factory using Zinc for coating.

b) after the above process the galvanized iron and steel is cleared by issue of invoice charging excise duty on the above process.

c) we also charge service tax on labour charges for the above activity.

My question is:

1. does the above process is correct under excise and service tax laws.

2. the valuation for excise and service tax purpose is 80% excise and 20% Service tax since we use only zinc procured by us and labour charges for the galvanizing process OR shall the value of materials received under job worker basis shall also be considered for excise duty calculation.

3. can we avail cenvat credit for zinc.

3. will VAT be applicable on the said activity.

Please share your expert opinion on the above and guide accordingly

Thanks and Regards

Moksh

AI Summary

Galvanisation as manufacture: job-work charges form transaction value and attract excise duty, not service tax.
Galvanisation of iron and steel is treated as manufacture for central excise; job-work charges must be included in the transaction value and attract excise duty, not service tax. Transaction value includes inputs consumed (zinc), job charges and profit. CENVAT credit on zinc used in galvanising can be availed. If the principal supplies raw material under job-work challans and pays excise on final clearance (with required notifications), the job-worker need not pay excise or reverse credit and need not charge service tax, subject to maintaining Annexure V; different rules apply if the principal does not discharge excise.