Rate of duty @2% or 6% on Job work goods

[S.C. WADHWA]

Dear Experts,

We are manufacturers of food items falling under excise chapters 20 and 21 and paying
duty @2% without getting cenvat credit, on MRP value after getting abatement. Now we
have got job work for items falling in chapters 20 and 21 with their brand name. According
to principal manufacturer we have to clear the goods after paying duty on MRP value
after getting abatement. All the raw material will be supplied by the principal manufacturer.
Now my query is whether we should pay excise duty @ 2% or 6% (Full rate) and in this
case an intimation is required to be given to excise deptt or not.
Regards,
WADHWA

AI Summary

Excise duty rate choice on job-work goods depends on whether cenvat credit is availed; lower rate if no credit.
Whether job-work finished goods attract the concessional excise rate or the higher rate turns on whether the principal manufacturer availed cenvat credit on inputs or input services. If the principal has not availed credit and supplies materials in its own name, the job worker may clear finished goods at the concessional rate after MRP abatement; if the principal has availed credit, the higher rate applies. The department may require proof of the principal's credit status and the notification claimed should be indicated in statutory returns.