Job work Excise formalities in India

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For doing Job work, what are the Excise formalities in India .

It may not be possible for an industry to carry all processes leading to manufacture of final product within its own premises. In such an eventuality the unit will have to get the work done (i.e. processing of the raw materials or intermediate product) from outside. The processes performed outside are called ‘job work’.


The expression "job work" means processing of or working upon raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process, and the expression "job worker" shall be construed accordingly.

Procedure ( for NON-SSI unit ) under notification no.214/86-CE dated 25.3.86

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Procedure to facilitate SSI (Small Scale Unit) units in getting job work done from other units

SSI units send inputs or semi finished goods for manufacture or processing on job work basis. The goods received from the job worker are used by the SSI unit for further manufacture.

Example illustrating the procedure to facilitate SSI (Small Scale Unit) units in getting job work done from other units

Job worker

Job worker. A SSI unit processes Calcined Bauxite. It has a previous year's Indian-sales of Rs. 80 lacs. It has not made any start-of-year declaration to the excise department. It has spare crushing / grinding capacity. It wishes to do job-work for VSCo. It will crush/grind the lumps supplied by VSCo. The Job worker should intimate (this is for abundant caution) the Assistant Commissioner having jurisdiction over his own factory before procuring goods for Job Work as also before clearing the goods for the premises of Principle manufacturer.

Draft Letter 

To,

The Assistant Commissioner,

Central Excise,

City


Subject: Intimation before procuring goods for Job Work / before clearing the goods for the premises of Principle manufacturer.


Dear Sirs,


We (EIPL) are an SSI unit processing Calcined Bauxite. We have a previous year's Indian-sales of Rs. 80 lacs. We have spare crushing / grinding capacity. We propose to do Job-work.


Another SSI unit ( VSCo: The principal manufacturer processes Steel Slag). It has a previous year's Indian-sales of Rs. 10 lacs. It has not made any start-of-year declaration to the excise department. It wishes to minimise use of its crushing / grinding department because of high maintenance costs. It wishes to get job-work done by EIPL. It will then do the final grading and sell it to the consuming industries.


This is to intimate to your goodselves before procuring goods for Job-Work as also before clearing the goods for the premises of Principle manufacturer.


Thanking you,

Yours Sincerely,


EIPL

(Job-worker)


The principal manufacturer

The principal manufacturer . Another SSI unit (VSCo) processes Steel Slag. It has a previous year's Indian-sales of Rs. 10 lacs. It has not made any start-of-year declaration to the excise department. It wishes to close down its crushing / grinding machine because of high maintenance costs. It wishes to get job-work done by EIPL. It will then do final grading to the chips and sell it to the consuming industries accross India.

draft letter 

To,

The Ast. Commissioner,

Central Excise,

City


Subject: Undertaking before interaacting with a job worker.


Dear Sirs,

We are a SSI unit ( The principal manufacturer ). We process Steel Slag. Our previous year's Indian-sales was Rs. 10 lacs. We wish to minimise use of our crushing / grinding department because of high maintenance costs. We wish to get job-work done by EIPL. We will then do the final grading and sell it to the consuming industries.


EIPL are an SSI unit having a previous year's Indian-sales of Rs. 80 lacs. They have spare crushing / grinding capacity. We propose to ask them to do Job-work.


This is to undertake..

(a) that the specified goods on return shall be used in the factory of the said supplier in or in relation to the manufacture of specified goods which are exempted from the whole or part of the duty of excise leviable thereon under the aforesaid notification; and ..


(b) that in the event of his failure to do so, he undertakes to pay excise duty, if any, payable on such goods, but for the exemption contained in this notification.


Thanking you,

Yours Sincerely,


VSCo

( Principal Manufacturer )

Notification No. 83/1994-CE Dated 11-04-1994: Exemption relating to goods specified in the SSI Exemption Notification No. 1/93-Central Excise , if manufactured on job work basis (for job worker)

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in the Annexure to the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 1/93-Central Excises, dated the 28th February, 1993 and falling under the Schedule to Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the specified goods) manufactured in a factory as job work, from the whole of the duty of excise leviable thereon, which is specified in the said Schedule, subject to the condition that the supplier of the raw materials or semi-finished goods gives an undertaking to the proper officer having jurisdiction over the factory of the job worker -

(a) that the specified goods received from the job worker shall be used in the factory of such supplier in or in relation to the manufacture of specified goods which are exempted from the whole of the duty of excise leviable thereon under the aforesaid notification; and

(b) that in the event of his failure to do so, he undertakes to pay excise duty, if any, payable on such goods, but for the exemption contained in this notification, as if such goods were manufactured by the said supplier and sold on his own account :


Provided that the waste or bye-product, if any, generated during the process of such job work shall also be exempt from the whole of the duty of excise leviable thereon under the said Schedule if -

(i) such waste or bye-product is used by the job worker for the manufacture of the said specified goods within his factory; or

(ii) returned to the said supplier and are used in the factory of the said supplier in or in relation to the manufacture of the specified goods.


Explanation. - For the purposes of this notification, the expression “job work” means processing of or working upon raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process, and the expression “job worker” shall be construed accordingly.


Notification No. 84/1994-CE Dated 11-04-1994: Exemption relating to goods specified in SSI Exemption Notification No. 1/93 if cleared for job work ( for the principal manufacturer )

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in the Annexure to the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 1/93-Central Excises, dated the 28th February, 1993 and falling under the Schedule to Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the specified goods) cleared by a manufacturer to a place outside his factory for getting any job work done on such specified goods, from the whole of the duty of excise leviable thereon, which is specified in the said Schedule, subject to the condition that the supplier of the raw materials or semi-finished goods gives an undertaking to the proper officer having jurisdiction over the factory of the supplier - (a) that the specified goods on return shall be used in the factory of the said supplier in or in relation to the manufacture of specified goods which are exempted from the whole or part of the duty of excise leviable thereon under the aforesaid notification; and(b) that in the event of his failure to do so, he undertakes to pay excise duty, if any, payable on such goods, but for the exemption contained in this notification.


Explanation. - For the purposes of this notification, the expression “job work” means processing of or working upon raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process, and the expression “job worker” shall be construed accordingly.

  • reference Notification no. 84/94
  • Commentary : Notification no.84/94 provides that a Small Scale Unit availing benefit of notification 8/98 and 9/98 can send any specified input without payment of duty to the job worker on the condition that the goods would be used for further manufacture by the SSI on their return and that in the event of failure the excise duty if any, payable on such goods, shall be paid by the supplier of the raw materials or semi finished goods. Also, the goods manufactured by the SSI out of the returned goods should be wholly or partially exempt, i.e. the value of clearances of the SSI should be below Rs. 150 lakhs, for it to be eligible for this benefit.

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