Opinion on CE / ST

[RAJAVARAPU NAGESWARRAO]

Dated 11^th April 2015.

To

The Consultant / Advisor,

Dear Sir,

SUB: CE and ST - Opinion on Supply of plastic containers 1 ltr / 5 ltr and more capacity (oil packing material) to OIL Refilers / Edible Oil Companies - Reg.

1. We wish to bring your notice that we are manufacturer of Plastic Edible Oil packing material under 39 CE Chapter. As per Chapter / Act our product are liable to pay ED @ 12.5%.
2. One of our major customers (Edible oil refilers) required above subject material from our company.
3. Now, the customer provides raw-material (like PP Granules, labels etc.,) supplied under job work procedure to our Unit under job work chalan.
4. Our Unit would be manufactured on the above oil packing material under job work procedure (usage of molding machines, man power, electrical power and mould also by our Unit). The customer has been paid job work charges on piece rate basis.
5. In this context please give your valuable opinion which activity applicable on this issue under Central Excise and Service Tax (a) Manufacturing activity OR Job Work Activity.
6. If the activity are in job work, shall we discharge Service tax on job work charges or not?
7. OR if the activity is covered under manufacturing, shall we discharge duty on job work charges?
8. Please give your valuable written opinion on the above subject issue at the earliest. FYI

Regards,

R Nageswar Rao,

AI Summary

Plastic Container Production Classified as Manufacturing Under Central Excise; Excise Duty Applicable, Not Service Tax A manufacturer of plastic containers for edible oil sought advice on whether their activities should be classified as manufacturing or job work under Central Excise and Service Tax regulations. They receive raw materials from customers and perform manufacturing using their resources. Responses from advisors suggested that since the process results in a new product, it qualifies as manufacturing under the Central Excise Act, necessitating the payment of excise duty. Service tax is not applicable as the activity is considered manufacturing. Additionally, CENVAT credit may be available for the duty paid on raw materials.