Clarfication required on job work

[gowri shankar]

Dear Sir,

We are manufacturing Kraft Paper Reels ranging from 80 GSM to 180 GSM we are going to send our Kraft Paper Reels to Job worker for convert into Kraft Paper Cores.

My Doubts are

1) Is there any permission to be obtained from Jurisdictional Asst./Deputy Commissioner ? for sending job work and what are the relevant rules/notifications/circulars?

2) If we purchase semi Kraft Reels with some other mills on payment of duty and send as such to the job worker for conversion of semi kraft reels in to paper cores.  Is there any provisons relating to this ?

3) Can we claim cenvat credit against the purchase of semi kraft reels from other miils? 

[YAGAY andSUN]

Reply to your queries:-

1. If you are not sending reels under Notification 214/86 then there is no requirement to obtain permissions.  You can simply send the goods under Rule 4(5)(a) of the  Cenvat Credit Rule, 2004  as amended time to time.
2. If you are receiving Kraft paper back in your factory premises after jobwork and if you are paying Central Excise Duty on Kraft paper and cutting charges, handling charges etc is included in the assessable value of the finished product (in your case it is craft paper), then according to my knowledge there should not be any issue at all.
3. If you are not removing reels as finished products then there should not be any problem in availing CENVAT credit. You must receive these reels as inputs.

[rajkumar shukla]

I FULLY AGREE WIH ABOVE VIEWS WITH AN ADDITION THAT EVEN IF YOU ARE SENDING REELS UNDER Notification 214/86 (THAT MEANS THAT PROCESS ADOPTED AT JOB WORKERS END AMOUNTS TO MANUFACTURE AND THUS RESULTANT PRODUCT IS THUS EXEMPTED) ONLY UNDERTAKING  IS REQUIRED TO BE SENT TO THE AC/DC AT JOBWORKERS" END..NO PERMISSION IS REQUIRED.

AI Summary

Cenvat credit available when inputs are sent for job-work and returned as inputs rather than cleared as finished goods. Transfers of Kraft paper reels to a job-worker do not require prior permission if not sent under the exemption notification; such transfers can be made under Rule 4(5)(a) of the Cenvat Credit Rules. If processed goods are returned to the principal factory and duty (including cutting and handling in assessable value) is paid, the arrangement is permissible provided the reels are treated as inputs and not cleared as finished products. CENVAT credit is available on purchased semi-kraft reels when received as inputs. Where the job-worker's process constitutes manufacture leading to exemption, an undertaking to the AC/DC at the job-worker's end is required.