Which procedure to follow to get goods manufactured from job worker?

[Yatin Bhopi]

Dear experts,

We are manufacturing having 3 unit A, B. We wish to do sends goods for job work as below.

1. Unit A will send XYZ product (A’s Finished goods falling under chapter 29) to Unit B on payment of duty.
2. Unit B will manufactured product ABC (falling under chapter 39) from XYZ and send it to Job worker.
3. Unit B will also supply some other consumables to job worker or Job worker use his own consumables.
4. Job worker will send finished goods PQR to unit B and finally clear it on payment of duty.

Under Rule 45 (a), rule says that Input or partially processed Input on which CENVAT is availed can be send. Here product ABC is manufactured from XYZ can be treated as partially process input or it will be treated as finished goods since after manufacturing, new product will come under existence and chapter heading is also going changed from 29 to 39.

Please let me know under which procedure it will fit best i.e. Rule 45 (a) of CCR 2004, Rule 16 B of Central Excise Rule 2002 or Notification 214 \ 86 CE.

Please share your views

AI Summary

Manufacture vs input classification: duty arises when processing yields a new product; clearance and valuation rules then apply.
Where an operation on received goods produces a distinct new product, that transformation amounts to manufacture and excise duty is payable on removal of the newly manufactured article; inputs or partially processed materials may be sent to job-workers under job-work procedures, but fully transformed goods cannot be treated as partially processed and must be cleared on payment of duty, with valuation and credit governed by applicable valuation rules and notification-based exemptions where conditions are met.