Job Work Issue

[ANKUR JINDAL]

We are manufacturing  Towers as well as doing Job Work and we have three situations:-

1)      If we manufacture Tower by using Own Steel & Own Zinc- We are charging Excise Duty-No Issue

2)      If we manufacture Tower by using Own Zink and Steel is supplied by customer- We are charging Excise on this transaction.

Quarry:- Here some of our customers have view that as per NN 214/86 we should not charge any duty. Is we are doing wrong? 

3)      If we manufacture Tower by using steel & Zinc supplied by customer- We are charging Service Tax on it under Business Auxiliary Head.

Quarry:- Here some of our customers have view that being this is a manufacturing activity. Hence we should not charge any Service Tax and Excise duty is Exempt as per  NN 214/86.Is we are doing right?

Thanks & Regards

Ankur Jindal

[YAGAY and SUN]

Dear Ankur,

It true that unde 214/86. Notification Excise duty is not leviable if the goods are being manufacutred.  Further, there is a set procedure under 214/86 Notification which is required to be complied with.

 

Regards,

Pradeep Khatri

[Suresh Kumar Agareal]

It appears you are manufacturer of excisable goods. Under Notification 214/86 you can do job work by following the  procedure laid down in the notification. Otherwise excise duty is leviable upon you.There is no question of service tax being manufacturing activity.

S.K.Agarwal

[YAGAY and SUN]

Service tax is exempted under Notification No.8/2005-ST and further amended by 19/2005-ST

[RadheyShyam Mangal]

1)      If we manufacture Tower by using Own Steel & Own Zinc- We are charging Excise Duty-No Issue

 2)      If we manufacture Tower by using Own Zink and Steel is supplied by customer- We are charging Excise on this transaction.

Quarry:- Here some of our customers have view that as per Notification 214/86 we should not charge any duty. Is we are doing wrong? Reply---If the Customer ( Principle Manufacturer files a declaration under Notification 214/86 then the job worker is exempt to pay duty.

3)      If we manufacture Tower by using steel & Zinc supplied by customer- We are charging Service Tax on it under Business Auxiliary Head.

Quarry:- Here some of our customers have view that being this is a manufacturing activity. Hence we should not charge any Service Tax and Excise duty is Exempt as per  Notification 214/86. Is we are doing right?

Reply- The service tax is not leviable if the activity of processing amounts to manufacture as per CE Act, therefore the view of the customer) Principle manufacture) is legally correct. If u r paying the Service Tax, then it be got refunded subject to provision of unjust enrichment and limitation period.

AI Summary

Job work exemption: customer declaration avoids excise liability; service tax only applies if processing is not manufacture.
Where the customer supplies inputs and the customer files the declaration required by the job-work exemption notification, the job worker is not liable to excise duty provided the notification's procedural conditions are complied with; service tax is not leviable where the processing legally amounts to manufacture, and any service tax paid contrary to that legal characterisation may be refundable subject to unjust enrichment and limitation rules.