Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com HRindiaonline.com
 
LOGIN
Forgot Password |  Register
Sunday , November 23, 2014 | Updated : Nov 23, 18:40 IST
Income Tax    Customs    Excise    Service Tax    FEMA    DGFT    SEZ    Misc    Pitara    Budget   
About Us Contact Us Advertise
Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com
NEWS FLASH
 
Bengal Governor K N Tripathi gets Addl Charge of Bihar RBI questions banks claiming refund of sums on re-appearance of in-operative account holders after 10 years Smart commitment for smart cities - USA, Japan, Singapore & Barcelona come forward to work on projects (See 'Breaking News') I-T - Whether income on letting out of property is to be assessed as income from house property when assessee's business was in real estate: HC (See '2014-TIOL-2026') CBI Court convicts two RBI officials in corruption case (See 'Mixed Buzz') ST - Delayed filing of appeal - Date of service of appellate Commissioner's order on appellant is under dispute - appeals rejected as time barred: CESTAT (See '2014-TIOL-2323') Emission gaps to widen by 2030 but low carbon path offers opportunities for future: UN Report (See 'Breaking News') CCI invites comments from public on proposed merger of Holcim and Lafarge (See 'Mixed Buzz') CCI invites comments from public on proposed merger of Holcim and Lafarge Anti-malarial drugs, diagnostics etc. cleared for Intensified Malaria Control Project exempted from CE & Customs duty (See 'Notifications in 'What's New') Jurisdiction of HC - Even Writ Petitions are not maintainable if dispute relates to determination of rate of Duty or Tax or value of goods: HC (See 'Breaking News') Govt extends anti-dumping duty on DVD-R & Diclofenac Sodium for five years (See Notifications in 'What's New') I-T - Whether Salt which is manufactured from sea water falls within definition of mineral & assessee is entitled for deduction u/s 80HHC: HC (See '2014-TIOL-2015') Taxation of Software, the impasse goes on… (See 'ST se GST tak' Column) SEZ - None can continue much less squat on public properties either by taking advantage of any inaction of public bodies or statutory authorities or by colluding with them - Petition dismissed: HC (See 'Breaking News') Gloomy future lies ahead for global shipping industry: UNCTAD (See 'Mixed Buzz') ST - Revenue appeal contending penalties is allowed by Tribunal and sustained by High Court – Writ against recovery - Petitioner directed to pay Rs 31 lakhs and recovery of balance amount is kept in abeyance: HC (See '2014-TIOL-2020') I-T - Whether when a sum eligible for deduction u/s 40A is deposited in bank account by account payee cheque, same is liable to be disallowed merely on the ground that it was deposited in cash: HC (See '2014-TIOL-2017') Railways to set up windmill farm in Rajasthan (See 'Mixed Buzz') US President Obama accepts PM's invitation to be R-Day Parade Chief Guest UN Chief welcomes pledges of more than USD 9.3 bn to Green Climate Fund (See 'Mixed Buzz') RBI directs banks to give one month notice to customers before levying penal charges on non-maintenance of minimum balances in savings accounts (See RBI Notification in ‘FEMA’) ECB Policy amended: RBI allows six months parking of proceeds abroad (See Cir 39 in 'What's New') Black Money can destabilise world peace: Prime Minister China cuts interest rate to boost up growth rate Govt to spend Rs 25300 Crore to curb open theft of power US Govt extends legal status to 50 lakhs illegal immigrants I-T - Whether when assessee receives refundable advance as per MoU for joint development of land, such sum is capital receipt, not taxable in the hand of assessee - YES: ITAT (See 'Breaking News') Tribunal has no power to direct pre-deposit while remanding a case - logically question of deposit does not arise unless there is an adjudication: High Court (See 'DDT' Column) NASSCOM is not liable to pay ST under category of Club & Association service in respect of subscription amount charged from members: CESTAT (See 'Breaking News') Mandatory Deposit - Love it or hate it, but learn to live with it! (Part II) (See 'Guest' Column) Cus - Recovery of incineration charges for destruction of goods as per SC order - there is no provision for grant of stay by CESTAT or for that matter under Customs - Tribunal has no jurisdiction whatsoever: CESTAT (See 'Breaking News') NRIs - Acquisition/Transfer of Immovable property - Payment of Taxes - RBI clarifies (See 'DDT') Whether Assessees can be compelled for payment of tax at revised compounded rates when choice of assessee, as to manner of payment of tax, was based on particular provision of law as it stood at time of exercise of option, and that basis was thereafter changed: HC (See '2014-TIOL-2009') SEZ Vizag needs a Development Commissioner (See 'DDT') Cabinet endorses SAARC Rail Network, Motor Vehicle Agreement and pact for energy cooperation (See 'Breaking News') SC directs CBI Director to recuse himself from monitoring of investigations in 2G Scam Export of software & services - Repatriation of exports proceeds - RBI extends period to nine months (See 'RBI Cir' in What's New) FM directs bankers to hike flow of credit (See 'Mixed Buzz')
 
Bookmark and Share
CENTRAL EXCISE (JOB WORK) RULES, 2004!

CENTRAL EXCISE (JOB WORK) RULES, 2004 !

By S Jaikumar & G Natarajan, Swamy Associates

UNFORTUNATELY, the very first Central Excise Non-Tariff Notification of the year 2004, has given rise to so many questions and leaves one puzzled as to what was the purpose behind the issue of this Notification. Let us examine further.

As per Rule 4 (5) (a) of the Cenvat Credit Rules (erstwhile Rule 57 F (4) of the Central Excise Rules, 1944) credit availed inputs can be removed, either as such or after being partially processed, to the premises of job workers for further processing, testing, repair, re-conditioning or any other purpose.

Rule 16 A already provides that any inputs can be removed as such, or after being partially processed, to a job worker, for further processing, testing, repair, re-conditioning or any other process, subject to the conditions prescribed by the Commissioner in this regard. The reference here is to inputs, whether credit availed or not. (When no credit is availed on the inputs, what is the necessity for controlling their removal?)

The following interferences could be drawn from the above rules.

a) Finished goods cannot be removed under these Rules for the stated purposes.
b) The removal must be only for the specified purposes.
c) No permission from the department is required.
d) After the said processes, the final products can be cleared directly from the premises of the job worker, after obtaining the permission from the Commissioner of Central Excise.

More than the above, Notification 214/86 provides for exemption for the goods manufactured on job work basis.

Let us now see, what the new rules have provided for.

By virtue of Rule 16 B, the following provisions have been incorporated.

a) Excisable goods in the nature of semi-finished goods can be removed for carrying out certain manufacturing process.

b) Permission from the Commissioner of Central Excise is required.

c) The goods can either be brought back to the parent factory or be directly cleared from the place, to which the goods have been removed.

By virtue of Rule 16 C, the following provisions have been incorporated.

a) Excisable goods manufactured in a factory can be removed for carrying out tests.
b) Permission of the Commissioner is required.
c) After such testing, the goods can either be brought back to the parent factory or be directly cleared from the place, to which the goods have been removed.

By issue of the present Notification, the following issues are going to crop up.

a) If a manufacturer clears his partially processed inputs (which have attained the character of excisable goods), under Rule 4 (5) (a) (credit availed ones) or Under Rule 16 A (credit not availed), the department may allege that what is being cleared is “excisable goods” and not “inputs partially processed” and permission should have been obtained from the Commissioner, under Rule 16 B or 16 C.

b) Then what is the difference between “inputs partially processed” and “excisable goods in the nature of semi-finished goods”. This question assumes more importance, when removal of the former doesn’t require any permission where the latter requires prior permission.

c) Can a final product (excisable goods), which is an input for further manufacture of another article, can be cleared by a manufacturer to his another unit, without payment of duty, under the provisions of the new rule 16B, claiming that they are only semi-finished goods, viewed from the ultimate final product to be manufactured by the another unit? (For example, in the automobile sector, inter-unit transfers of manufactured goods are quite common). If so, the relevance of Rule 8 of the Valuation Rules itself would become redundant and the cumbersome activity of calculation of cost of production for the purpose of payment of duty, can be avoided. Paying duty at one unit and availment of credit at the another unit, which is a revenue neutral activity, can be avoided. Lots of objections as to calculation of cost of production, which is nothing but an exercise in futility (as whatever is paid here would be availed as credit by the sister unit) would see their coffin.

d) When the final products are cleared directly from such other place, under Rule 16 B / 16 C, who has to discharge the duty liability? Whether the parent manufacturer or the “such other registered premises”?

e) When there are so many provisions for dealing with job work, what is the need for having another lengthy rule viz., 12 B?

f) When a same situation can be dealt with under different Rules, and when the different rules provide for different procedures, will it not lead to claims and counter-claims?

Let us humbly suggest the following :

At present, provisions as to job work are spilled over in several places, viz., Notifications 83/94, 84/94, 214/86, Rule 4 (5) (a) of Cenvat Credit Rules, Rule 12 B, Rule 16 A, Rule 16 B, and Rule 16 C of Central Excise Rules and in the celebrated judgement of the apex court in the case of Ujjgar Prints. Though the judgement of the apex court in the Ujjagar print case, 2002-Taxindiaonline-02-SC-CX, is still honoured, it is yet to get legislative recognition, in the form a Rule. Moreover, all the provisions relating to the subject have to be codified at a single place, in the form of “Central Excise (Job Work) Rules, 2004”. Such codification shall provide for the following.

a) Inputs (credit availed or not availed) and semi-finished goods, can be cleared out of the factory, without payment of duty/reversal of credit, for carrying out further manufacturing activity, repair, test, re-conditioning or any other purpose.

b) If the removal is of credit availed inputs, such inputs have to come back within 180 days of removal.

c) Credit availed capital goods can also be removed without reversal of credit, for the purposes of repair, test, re-conditioning, etc. of such capital goods and received back within 180 days.

d) Credit availed capital goods can also be removed to the premises of job workers for being used in the manufacturing activity continuously, without any time limit for bringing them back.

e) Provision for dealing with the scrap arising in the premises of job workers, similar to the one available in the erstwhile Rules may be brought back.

f) Excisable goods even in the nature of final products can also be cleared without payment of duty, to other units of the same manufacturer for further manufacture and subsequent clearance of goods on payment of duty.

g) After the processing, the finished goods arising out of the factory can either be returned to the parent manufacturer or be cleared directly from such other place.

h) If the “such other place” is a registered premises / other unit of the parent manufacturer, the duty thereon can be paid either by the parent manufacturer or by such other person. Will the new rules help the manufacturers to send the tools/capital goods, either manufactured by them or purchased by them, to the premises of job workers, for being continuously used in the activity of job work? This is a nagging problem. Rule 4 (5) (a) of the Cenvat Credit Rules, imposes a restriction as to bringing back such goods within 180 days, which is not practically possible.

i) It is a common practice for the manufacturers to manufacture the tools required for their manufacturing activity also and such tools would either be used in the factory itself, or at the job workers premises. So long as such tools are used in the factory, the benefit of exemption contained in Notification 67/95 would be available. But when such tools are removed to job workers place, the said exemption is being denied. As such, the term of “factory of production” appearing in Notification 67/95 shall also include the premises of the job workers.


POST YOUR COMMENTS
   
 
 
TIOL Mobile App
TIOL SEARCH
 
TIOL Subscriptions
 All-In-One Package
 Indirect Tax Package
 Income Tax Package
<< More Packages>>
 
   
             
Income Tax Customs Excise Service Tax FEMA DGFT SEZ Misc Pitara Budget
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • ITAT Cases
  • Instructions
  • Advance Ruling
  • Settlement
  • Other Case
  • Directorate of Income Tax (Systems)
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Settlement
  • Advance Ruling
  • Safeguard Duty Notfn
  • Anti-dumping Notfn
  • Drawback Cases
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Settlement
  • Advance Ruling
  • Excise Amendment
  • Clean Energy Cess Notfn
  • MISC Circulars
  • 37B Order
  • Commr.(A) Order
  • CESTAT
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Miscellaneous
  • Advance Ruling
  • FAQ
  • Finance Act, 1994
  • Commr. (A) Orders
  • 37B Order
  • Removal of Difficulty
  • VCES
  • Accounting Head
  • Exchange Manual
  • Fema Notifications
  • SC Cases
  • HC Cases
  • RBI Notifications
  • Act
  • Rules
  • Regulations
  • Master Circulars
  • RBI Circulars
  • Depository Scheme
  • Notifications
  • Circulars
  • Public Notices
  • Trade Notice
  • FTDR Amendment 2010
  • MISC
  • State Acts
  • Notifications
  • Instructions
  • Act 2005
  • Rules 2006
  • DGEP
  • State Policy
  • SC Cases
  • HC Cases
  • VAT Cases
  • Deputation Posts
  • Service News
  • The Insider
  • Transfer
  • Promotion
  • Recruitment Rules
  • Transfer Policy
  • Training Circulars
  • Service Cases
  • MISC
  • Pay Commission
  • Cadre Review
  • Budget Circular 2013-14
  • Union Budgets
  • Economic Surveys
  • Budget Speeches
  • Finance Acts
  • Finance Bill
  • TRU - D. O. Letter
  • A Taxindiaonline Website. Copyright © 2014 Taxindiaonline.com Pvt.Ltd. All rights reserved. | Powered by 4th Dimension