RECORD TO BE MAINTAINED FOR JOB WORK

[S.C. WADHWA]

WE BOTH PRINCIPAL MANUFACTURER AND JOB WORKER ARE TWO COMPANIES OF THE SAME GROUP HAVING DISTANCE BETWEEN 200 K.M IN THE SAME STATE.  BOTH ARE MANUFACTURER OF EXCISEABLE GOODS AND GOODS PRODUCED COMES UNDER PRODUCTION AS PER EXCISE ACT. THE PRINCIPAL MANUFACTURER WILL PAY EXCISE DUTY AFTER THE RECEIPT OF GOODS FROM JOB WORKER AT THE TIME OF CLEARANCE OF THE SAME FROM THEIR UNIT AS IT IS OR AFTER USE OF THE SAME IN THEIR FINAL PRODUCT.  NOW OUR QUERY IS 1) WHETHER WE ARE EXEMPT FROM SERVICE TAX AND 2) WHICH RECORD WE BOTH THE COMPANIES SHOULD HAVE MAINTAINED TO AVOID ANY PROBLEMS CREATED AT THE TIME OF SERVICE/EXCISE TAX AUDIT. PLEASE SUGGEST.

REGARDS,

WADHWA

 

[Mahaganapathi V]

Sir

1. Under mega exemption notification  no. 25/2012 any service rendered by a person by carrying out an intermediate production process as job work in relation to any goods on which appropriate duty is payable by the principal manufacturer is not service taxable.

2. This relates to excise matter and the order will be done through 57F4 procedure. Documentation process needs to be understood with consultants or professionals.

 

 

AI Summary

Job work exemption shields intermediate production services from service tax when the principal is liable for excise duty. Under mega exemption notification no. 25/2012, services rendered as an intermediate production process by a job worker in relation to goods on which the principal manufacturer is liable to excise duty are not taxable as service; parties should maintain contemporaneous documentation and follow the 57F4 procedure to demonstrate linkage between job work and excisable goods for audit purposes.