Unit Y got job order from Unit X to manufacture plastic boxes. Raw material will be supplied by X. X will do some finishing work i.e. labelling etc at their own before billing to customer. What chargeability arises for excise duty/ service tax on the part of Y & X both. Will unit X get any modvat/cenvat credit against tax charged by unit Y, if any.
Excise Duty Applies to Unit X for Manufacturing; Cenvat Credit Available; Options for Processing and Clearance Discussed Unit Y received a job order from Unit X to manufacture plastic boxes using raw materials supplied by X. The discussion centers on the applicability of excise duty and service tax. It is concluded that the finishing activities by X classify as manufacturing, subjecting them to excise duty, not service tax. Unit X can claim cenvat credit on duties paid. Two options for X include either bringing the goods back for further processing and duty payment or clearing them directly from Y's premises with special permission. Job work under specific notifications exempts Y from excise duty, with implications for cenvat credit reversal. (AI Summary)
TaxTMI 
TaxTMI 
