LEVY OF EXCISE DUTY ON JOB WORK TO ANOTHER UNIT OF SAME COMPANY

[S.C. WADHWA]

A unit of a Pvt. Ltd. Co. made job work for another unit of same

company. After job work, materials transferred vide invoice

bearing 'transfer of goods to branch office'. Excise duty was levied

on job work.

Query is :

Whether it is correct to levy excise duty.

Can another unit avail cenvat of same since it is paying excise duty on final products.

AI Summary

Excise Duty on Intra-Company Job Work: Cenvat Credit Allowed for Receiving Unit Under Notification 214/86. A private limited company's unit conducted job work for another unit within the same company, transferring materials with an invoice marked 'transfer of goods to branch office.' Excise duty was imposed on this job work. The query was whether this levy was correct and if the receiving unit could avail Cenvat credit, given it pays excise duty on final products. The response clarified that the receiving unit could indeed avail Cenvat credit, as there is no restriction on the job worker paying duty and the principal manufacturer taking credit, provided it is otherwise allowed. Notification 214/86, which exempts job work, is optional.