JOB WORK -Payment of service tax and excise duty

[praveenkumar makam]

our company id doing Job work (i.e manufacturing of chemical Product) and send it to customer. The Finished product is liable to pay Excise duty. whether Job work is liable to pay excise duty and service tax. If it it is liable under which section

[Brijesh Verma]

Dear Sir, Taxability of any Job-worker has two aspects :

• He undertakes a process which amounts to manufacture under section 2(f) of Central Excise Act 1944.
• He undertakes process classifiable otherwise.

In you case since he is manufacturing chemicals (which you say, is dutiable at final stage) then he is absolutely out of service tax net. As far as liability of excise is concerned, the same depends upon the agreement between the JW and principal manufacturer. If the goods were sent under Notification 214/86 then excise has to be paid by the principal only.

[praveenkumar makam]

 that meansJob work does not attarct service tax

[praveenkumar makam]

Dear varmaji

plese mention the section or rule or notification or case law if any relating to this discussion

Thanking u sir

[Guest]

ST notification 8/2005 dated 01/03/2005 will clear all your points.

 

AI Summary

Job work treated as manufacture excludes service tax; excise liability rests with the principal when notification applies. Where a job worker undertakes a process that amounts to manufacture under the Central Excise Act, that activity falls outside the service tax net and is treated as manufacture for excise purposes. Excise duty allocation depends on the agreement and applicable excise notification: if goods are sent under the relevant notification permitting job work clearances, excise may be payable by the principal; otherwise excise responsibility follows the manufacturing activity.