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.

[Rajesh Nathoo]

Dear S.C. Wadhwa ,

Yes another unit can avail the Cenvat Credit .

There is no bar for job worker to pay duty and Principal Manufacturer taking credit on same if allowed otherwise .

Not. 214/86 exempting job work is optional .

AI Summary

Cenvat credit: principal manufacturer may claim credit where a job worker within the same company pays excise duty on processed goods. Levy of excise duty on job work between units of the same company is not precluded; the job worker may pay duty on processed goods and the principal manufacturer can avail Cenvat credit for that duty, subject to normal credit conditions. The job work exemption under Notification 214/86 is optional and does not prevent duty payment by the job worker or credit claim by the principal.