Job work service

[Gopal B]

Dear Sir,

We are sending material to a job worker on job work challan, after completion of Jobwork we are getting back our material.The Job worker returned the challan and also raising Excise Invoice showing Excise duty.Is this system is right or wrong ? Pls clarify.

Thanking u.

AI Summary

Job work tax treatment: manufacturing processes attract excise duty while non-manufacturing work may attract service tax with credit implications.
Whether a job worker must charge tax depends on whether the process constitutes manufacture; if so, the job worker pays excise duty and issues an excisable invoice with the duty available as credit to the principal. If not manufacture, the job worker may return inputs under the original challan without excise duty but the activity may attract service tax, and specified exemptions relieve service tax where the principal pays the final duty. Notification provisions also allow duty/payment arrangements between related parties and affect CENVAT credit entitlement.