Excise Duty against Job Work / Lease based manufacturing facility

[Guest]

Dear Sir,

I am interested to start manufacturing food colour from one of the manufacturer based on monthly rent basis. I am showing it as a Job work because that unit will manufacture the product only for my company. I will procure all the raw material and suply it to them . they only use facility and manpower to convert it to finished product.

I want to know, what kind of license required to manufacture such product. Also who will pay the excise duty agaist process. As per SSI unit, can i get benefit of 150 lack limit.

Thanks

Sachin

[Himansu Sekhar]

Sir,

Please make it more clear pointwise.

[Guest]

Dear Sir,

Thanks for yourprompt reply.

I am interesred to manufacture food color from one of the manufacturer on Job Work Basis in his facility. That facility will manufacture the product only for me based on our mutual undestanding. I will suply him all raw material require to manufacture Food color, which will be purchased by my company on my account. I will pay monthly rent for his facility. I want to know

1.What kind of license / certificate are required to manufacture product on job work basis.

2. What are the benefits i will get as i starting new business under Small Scale Industry

(Exemption for Excise Duty)

3. I am manufacturing product on job work basis, who will pay the excise duty???

Kindly Suggest Mr. Himanshu

2.

[KASTURI SETHI]

Your product is eligible for SSI exemption benefit. First avail threshold exemption of ₹ 1.50 crore. Central Excise Registration Certificate is required from Central Excise Department. You can get job work done under Notification No.214/86-CE as amended. Exemption from CE duty on job work is admissible provided CE duty is paid on final product by the Principal Manufacturer. Job worker can also pay CE duty depending upon agreement between both. Intimation has to be filed the jurisdictional A.C./D.C. under whose jurisdiction job worker falls. Intimation is to be given by the Principal manufacturer.

[KASTURI SETHI]

Dear Querist,. Pl.also go through notification nos.83 & 84/94-CE as amended. These are not for job worker and jobbee ( Principal manufacturer).

AI Summary

Excise duty on job work: principal liable for final duty unless agreement assigns payment to job worker; registration required. Manufacture through a third party job worker requires Central Excise registration and may attract SSI exemption at the principal manufacturer level subject to the statutory threshold. Job work is governed by the job work notification framework; exemption on job work is admissible if the principal manufacturer pays duty on the final product, although the job worker may pay duty by agreement. The principal manufacturer must file intimation with the jurisdictional assessing officer of the job worker's premises.