Whether service tax is leviable on job-work income earned on job-work process on excisable goods supplied by Registered manufacturer.

[samiuddin ansari]

Hello.... Good morning sir,

One unit, say unit "A" registered with Central Excise as well as Service tax engaged in the manufacture of C.I.Casting as well as in doing job-work process for conversion of raw materials i.e. pig iron etc. supplied by principal manufacture i.e. unit "B" registered with Central excise as well as service tax on being filing of required declaration as provided under Notification No. 214/86-CE, to C.I.casting considered to be job work process of manufacture by former unit. The principal unit i.e. unit "B" supplied the raw materials to former unit under prescribed job-work challan regularly. (i) Here, my query is whether unit "A" is required to discharge the service tax liability on job-work income as activity appears to be the manufacture which is out of purview of Service Tax owing to mega-exemption Notification No.25/2012-ST read with Section 66D of Finance Act, 1994.

(ii) In case, if there is no leviability whether proportionate amount of Cenvat credit of duty and taxes availed on input and input services is reversible or otherwise, though unit "A" is also availing of Cenvat Credit of duty as well as taxes paid on input and input services for the dutiable finished goods and taxable output services and not maintaining separate account as specified in Rule 6(2) or 6(3) of the Cenvat Credit Rules, 2004.

 

[YAGAY and SUN]

If you had paid Excise duty on the finished goods made out of such job worked goods then no need to pay the service tax.

[Ganeshan Kalyani]

If the process amounts to manufacture then service tax is not applicable .

AI Summary

Service tax exemption on manufacturing job-work where the process amounts to manufacture and excise duty is paid on output.
Levy of service tax on job-work for excisable goods supplied by a registered manufacturer turns on whether the process amounts to manufacture and whether excise duty is paid on the finished goods; where the process is manufacture and excise duty is discharged on the finished output, service tax does not apply. A compliance issue remains as to whether proportionate Cenvat credit must be reversed when no service tax is leviable and separate accounting for credit allocation is not maintained.