Jobwork done to EOU

[Guest]

We are manufacturing unit doing job work to the EOU unit.  Can we bill them for job work without service tax registration. How to show this job work services under Excise return ER-1 as well at CST & VAT returns .

Can any one help me in this regards

Priya

[CASeetharaman KC]

If you are doing job work then you should be following the provisions of Notification 214/86 for job work wherein all the details about the procedures to be followed when goods move for job work  are given . You also need to look at the provisions of Rule 12BB of the Central Excise Rules, 2002  if you are a Large Tax Payer.

Relevant areas of the Notification 214/86 are as given below:

Job work under Notification No. 214/ 86

Notification No. 214/ 86 provides for exemption from job work. Notification provides that 'Job worker' is exempt from all types of duties i.e. basic duty, special duty, additional duty (goods for special importance) and NCCD. The duty liability is of the supplier of raw material.

The exemption contained in this notification shall be applicable to the goods, in respect of which the supplier of the raw materials or semi-finished goods gives an undertaking to the AC/ DC of central excise having jurisdiction over the factory of the job worker that after the job work,

·  the material returned by the job worker will either be used by the supplier for further manufacture or clear the product as received from the job worker on the basis as mentioned in above paragraph from points (a) to (e), and

·  give evidence that the goods have been used or removed in the manner prescribed above, and

·  he (supplier of raw material) discharges the duty liability on the final product.

Other points to be noted under this notification are: -

·  The exemption is available even if job worker manufactures an intermediate product.

·  Eligibility of inputs to be sent and final products to be manufacture are as discussed above.

·  Exemption under notification is not available, if no duty liability arises on final product.

·  Waste and scrap arising during job-work is not required to be returned to raw material supplier as new Cenvat credit provisions make no provision of returning the scrap to the raw material supplier. Thus, job-worker is liable to pay duty on scrap as he is the 'manufacturer' of the scrap.

·  Trader cannot send goods for job-work under this notification. Following are eligible to send materials for job-work -

-  Manufacturer

-  Exporter

-  Units in SEZ, EOU, EHTP, STP

As stated above units in SEZ can send goods for job work under this notification and hence the procedure specified in the notification 214/86 may be be followed.

ER1 Return has the space where intermediate goods cleared without payment of duty can be declared.

[Vijay kumar]

In terms of sl.no.30(c) of Nofn.25/2012-ST, goods manufactured under job work are exempted from service tax, provided the final product suffers duty. In your case, if the EOU is exporting goods (and not clearing in to DTA on payment of duty), then you are liable to pay service tax, for which you need to obtain Service tax registration, subject of course to threshold exemption under Nofn.33/2012-ST. Since you would be paying service tax on jobwork process, the question of showing the same under ER-1 does not arise. In fact, ER-1 does not contemplate reflecting of job work transactions, in my view. I am not aware of CST and VAT returns.

[Swamy RR]

Good evening mam,

 

1.  If the jobwork you carry out  amounts to manufacture, then there is no service tax.

2.  If the jobwork does not amount to manufacture, then it is taxable under service tax

3. As on date, there is no exemption for service tax for EOU.

4  Therefore you have to charge service tax at 12.36%.

5.  The EOU can either take cenvat credit of the said service tax or can seek refund from its jurisdictional service tax authorities

6.  Hope, this clarifies your query

 

All the best!!

 

Regards

 

Rrswamy

[Swamy RR]

Dear mam,

 

1.     If the job work you  carry out does not amount to manufacture, then you are required to pay service tax since, EOU goods are not chargeable to duty.

2.    That being so, the transaction is not covered under central excise.  But under service tax.  Therefore you have to show the transaction in ST -3.

3.    Needless to mention are the requirements of taking service tax registration, if not already taken, pay appropriate service tax raise service invoice.

Regards,

 

Rrswamy

[Guest]

hi,

Can you suggest me applicability of servicetax for job work done to a manufacturing unit.

For example if we done job work services for ₹ 6000000 whether sertvice tax registration is required or not

Regards,

Dileep Reddy

AI Summary

Service tax liability for job work to an EOU hinges on whether the final product is excise liable and whether the work amounts to manufacture. Service tax and central excise treatment of job work for an EOU turns on whether the job work amounts to manufacture and whether the final product is subject to excise duty. Notification No. 214/86 exempts job workers from excise duties if the supplier undertakes to discharge duty on the final product and return/use conditions are met; scrap is treated as manufacture by the job worker. Where the final product does not suffer duty (for example, when goods are exported from an EOU), job work may attract service tax and require registration, while the EOU may claim Cenvat credit or seek refund.