Job work under 7114

[Arun Aggarwal]

Sir,

I have a factory in Delhi and its branch in Chandigarh both are registered with central excise as manufacturer.

If I purchase cenvatable gold in Delhi and transfer the same to Chandigarh, and Chandigarh makes coins out of it under 7114 and the transfer it back to Delhi office which after further processing exports it under rule 18 Rebate.

My question is that whether Chandigarh factory can take the cenvat and charge excise duty and return to Delhi factory or it will be called Job work in the hands of Chandigarh Factory?

My interest is to pay excise in Chandigarh and Delhi factory takes the cenvat and export it under rebate

Arun

[Rajagopalan Ranganathan]

Sir,

Since your Chandigarh factory converts gold supplied by you into coins the process amounts 'manufacture' under Section 2 (f) of Central Excise Act, 1944. Therefore your Chandigarh factory has to pay duty on the coins when they remove it your Delhi factory. If you avail job work notification No. 214/86-CE then your Chandigarh factory need not pay any duty but you have to prove that coins manufactured at Chandigarh factory is semi-finished in nature and without subjecting the same to further process(es) the same cannot be marketed. The option is yours and exercise the same judiciously.

[Arun Aggarwal]

Sir

process in Chandigarh is manufacturing , but I fear that excise may take it as job work in hand of Chandigarh.

Or my understanding is wrong?

[Rajagopalan Ranganathan]

Sir,

In that case you need not avail Notification No. 214/86. Ask Chandigarh unit pay duty on the coins and you take credit of the same on receipt of the same in your Delhi unit. You can use this credit for payment of duty on the gold coins subjected to further process and export the same under claim of rebate under rule 18 of Central Excise Rules, 2002.

[Arun Aggarwal]

Thanks sir

[YAGAY and SUN]

If you export from Chandigarh after getting the permission from jurisdictional commissioner, then, you need not to pay Central Excise Duty and claim back duty as rebate claim. It will reduce the cost of export.

[Arun Aggarwal]

Pls consider this also

Rule 12AA - Job work in articles of precious metals falling under heading 7114 of the First Schedule to the Tariff Act - Central Excise Rules, 2002

AI Summary

Manufacture vs job work: duty liability on coin conversion and use of cenvat credit for export rebate.
Conversion of cenvatable gold into coins at a branch unit is manufacturing and attracts excise duty on removal; alternatively the branch may be treated as a job worker under the job-work exemption if the coins are demonstrably semi-finished and cannot be marketed without further processing. If duty is paid by the branch, the principal unit may claim cenvat credit on receipt and use it for duty on further processing and export rebate claims. Permission to export directly from the branch is a further option to secure rebate under the central excise rules.