JOBWORK AND DESPATCH

[SNEHAL SHAH]

SIR,

We are group of companies at gujrat and other state . Due to this our one unit is job work our surat unit product ( WIP ) after that ths material is called FG ( FINISHED GOODS ) & We are planning to so sell ( dispatch ) with excise invoice directly job work unit ( lying at rajasthan ). Due to havy transportation cost we want this type of dicition . We have some confusion , so please clear :

1) Can we directly dispatch this mateiral at job work unit ? if yes Excise duty debited by Job work unit or Surat unit  , Consigner name & consigee name etc.

2) Please brief all procedure .

SACHIN

[Snehal Kulkarni]

 

You can clear the Finished Goods which are resulting after the Jobwork at Jobworker's premises.

Please go through the Rule 4 ( 6 ) of Cenvat Credit Rules 2004, where you have to seek a permission from the Jurisdictional Deputy Commissioner for clearance of FG from the Jobworkers premises.

[CASeetharaman KC]

The following provisions in relation to valuation will apply. Utmost care should be taken that despatches from the job worker are done keeping the following provisions in mind

Valuation in case of job-work - there is no sale when the buyer sends the material free of cost to work upon it and in turn the manufacturer get the work done from job worker. In such case, till 31-3-2007, assessable value was to be calculated as the cost of raw material supplied by the buyer plus job charges.

However, with effect from 1-4-2007 the provisions of valuation of goods manufactured by the job worker has been changed and Rule 10A has been inserted to the valuation rules. Accordingly:

                (i) where the goods are sold by the principal manufacturer for delivery at the  time  of  removal  of  goods  from  the  factory  of  job-worker,  where  the  principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the transaction value of the said goods sold by the principal manufacturer;

              (ii) in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job -worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of job-worker and   where the principal manufacturer and buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be   the   normal transaction   value   of such goods sold   from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of said goods from the factory of job-worker;

             (iii) in  a  case  not  covered under clause (i)  or (ii),  the  provisions  of  foregoing  rules,wherever applicable, shall  mutatis  mutandis apply for determination of the value of the excisable goods:

 Provided that the cost of transportation, if any, from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods.

Explanation.-  For  the  purposes  of  this  rule,  job-worker  means  a  person  engaged  in  the manufacture or production of goods on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorised by him.

[SNEHAL SHAH]

SS

AI Summary

Job-work clearance: permission required under Cenvat rules and Rule 10A valuation governs excise value of goods.
Finished goods from job-work can be cleared from the job-worker's premises subject to obtaining permission under Rule 4(6) of the Cenvat Credit Rules, 2004. Valuation is governed by Rule 10A: (i) transaction value on removal if sold by the principal at removal to an unrelated buyer; (ii) normal transaction value at the other place if sold after transfer; (iii) otherwise apply other valuation rules mutatis mutandis. Transportation cost from the premises of sale to delivery is excluded from value. "Job-worker" is defined as a person manufacturing on behalf of a principal using inputs supplied by the principal or an authorised person.