Applicability of excise and service tax on job work

[Asked by Guest]

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

Service tax applicability on job work: may apply as business auxiliary service unless activity qualifies as manufacture exempting service tax.
The tax characterisation of CNC job work cutting customer-supplied components is disputed: one view treats the activity as non-manufacture liable to service tax as Business Auxiliary Service, with possible exemption where the principal pays excise on finished goods; an alternative view treats the work as outsourced manufacture, incorporating jobwork cost into manufacturing cost and excluding the operation from service tax.