Applicability of Rule 10A clause iii

[Dharmender Batra]

we are doing job work of customer located in HP (excise free zone). against material supplied by party app. Rs.400/- per kg we take the cenvat credit and then charge duty on full material value plus job work charges Rs.22.3 per kg. department is of view that Rule 10A clause iii is applicable to us and accordingly valuation should be as per rule 8. please guide us.

[Surender Gupta]

Since there is a specific case, you have to ensure that the goods are being sold by the HP unit as such or used for further manufacture of goods. What is the relation between job worker and principal. All these will help you to decide the issue according to law.

AI Summary

Valuation under Rule 10A may require Rule 8 valuation for job worked goods depending on principal-job worker relationship. A job worker in an excise free zone took cenvat credit on inputs and charged duty on full material value plus job charges; the department asserts applicability of Rule 10A clause (iii) requiring valuation under Rule 8. The decisive facts are whether the goods are sold by the excise free unit or used for further manufacture and the precise legal commercial relationship between the principal and the job worker, which will determine whether the special valuation provision applies.