Applicability of excise and service tax on job work

[kailash chandra]

A manufacturing company, registered with excise doing jobwork with the help of CNC wire cut machine. The jobwork done is to cut the metal peice(send by customer on challan) as per design given by the customer. The part ultimately find place in the die assembled by the customer. The customer is also registered with excise but the product on which the jobwork done is not sold as the same is capital expenditure for him of in few cases it is repair of die. Please advice about the applicability of excise and service tax on job work done. Thanks kailash

AI Summary

Debate Over Excise vs. Service Tax for CNC Wire Cut Job Work: Is It Manufacturing or Business Auxiliary Service? A manufacturing company, registered with excise, performs job work using a CNC wire cut machine to cut metal pieces provided by customers. The issue is whether excise or service tax applies to this job work, as the parts are used for capital expenditure or die repair by the customer. One respondent suggests the job work is liable for service tax under Business Auxiliary Service since it does not constitute manufacturing. Another agrees but notes that if the main manufacturer pays excise duties, an exemption from service tax might apply. A third opinion argues that the activity is manufacturing, thus exempt from service tax.