57F4- excise is applied my my row material by job worker.

[Avanish Gupta]

Dear Team,

We supply some our components to our supplier on job work challan, and our supplier also add some more component to prepare one complete assembly.

Suppose the value of our components is ₹ 65.00 and the value of components added by our supplier, is ₹ 75/- including his labour. While making the Excise invoice to us, on what amount he will charge the excise duty ,on 75/- or including our cost also i.e. 135/-. and our cost will be deducted from the gross Invoice Amount.

please explain the process as per Excise guidelines.

My qus. is that why they are charging the excise on my my material, however we already have paid the Excise and if again the job worker would apply the excise again on my material, it will be duplication of tax.

And as far as i know 57F4 challan means my material is going out only for further process.

Please suggest me and provide the act or sec. so that i can improve my self.

Regards,

Avanish

[Rajagopalan Ranganathan]

Sir,

If the process undertaken by your job worker does not amount to 'manufacture', then no cenvat duty payable on job worked goods. If the process undertaken amounts to manufacture then job worker has to pay duty on the transaction value, that is, cost of raw material + cost of material added by the job worker + job charges charged by the job worker + job worker's profit. This is as per rule 6 of Central Excise Valuation Rules.

[KASTURI SETHI]

2016 (12) TMI 1260 - CESTAT ALLAHABAD Lohia Starlinger Ltd. Versus C.C.E. & S.T., Kanpur

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. The case law as cited by Sri Kasturi Sir, nails the issue.

[Ganeshan Kalyani]

The case law answers the query of the querist.

[KASTURI SETHI]

Sh.Kalyani Ji,

Thanks for your deep study.

[Guest]

Dear Sirs,

In my view if the final product attracts excise duty then job worker do not have to pay excise while sending it back ?? but rather he can charge service tax. and principal supplier has to pay ST in RCM and take credit.

Please endorse if this is Ok or correct me if my understanding.

thank you,

Mitesh

AI Summary

Excise valuation on job work: duty assessed on transaction value including raw materials and job worker additions. Excise liability depends on whether the job worker's operations amount to manufacture: if not, no Cenvat is payable; if yes, duty is payable on the transaction value comprising the principal's raw material cost, materials added by the job worker, job charges and the job worker's profit under the Central Excise Valuation Rules.