Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com HRindiaonline.com
 
LOGIN
Forgot Password |  Register
Wednesday , August 20, 2014 | Updated : Aug 20, 19:48 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
 
CBDT extends due date for furnishing of audit report for assessees not required to submit report u/s 92E (See 'Instruction' in Income Tax) Forward Contracts Regulation - Draft Rules - MoF seeks public comments (See 'Mixed Buzz') Govt sets up Panel to review working of FCI and suggest new structure CX - Delay of 406 days in filing appeal before CESTAT not condoned -Dues of more than Rs.8 crores - petitioner selling the company and machineries in auction and same bought by close relatives - conduct of petitioner lacks bonafide - Petition dismissed: High Court (See 'Breaking News')' Lucknow DRI seizes 107 kg Nepali hashish being carted by Maruti car; Two persons arrested Govt notifies hike in PPF threshold from Rs 1 lakh to Rs 1.5 lakh (See Saving Scheme in 'TIOL Library') CBEC lays down Guidelines for seeking Customs exemption u/s 25(2) (See Cir 9 in 'What's New') MoF releases Draft Rules on Forward Contracts Regulations (See 'What's New') CBDT all set to promote IRS officers of 1981-86 batches as Principal CIT and 1992-94 batches as CIT NY Banking Regulator imposes fine of USD 300 mn on Stan Chart bank for poor anti-money laundering norms Mr. Prime Servant – Here is a sample of your Ir-Reverent Servant (See 'DDT' Column) ST - Tax paid by appellant on reverse charge basis in respect of services provided by its agents in J&K and credit availed thereof - CENVAT Credit taken by appellant is nothing but refund of service tax paid by them on services on which they were not required to pay service tax: CESTAT (See 'Breaking News') AV of imported goods - inclusion of packing & labelling costs (See 'Guest' Column) CX - Ceramic Tiles cleared to builders, hotels & schools under contract are to be valued in terms of s.4 & not s.4A - Demand upheld & appeal rejected: CESTAT (See 'Breaking News') About a Hundred crores spent/wasted on CBDT Officers foreign Jaunts (See 'DDT') Income tax - Whether an exporter is eligible to claim deduction u/s 80HHC for deemed credit under CENVAT Incentive Scheme - YES: HC (See 'Breaking News') Ebola scare: Delhi Airport yet to come across first suspect (See 'Mixed Buzz') Demand of duty on clandestine removals - Since appellant had prepared invoices during period, clearly indicating therein that they are operating under compounded levy scheme, it cannot be held that they had removed goods clandestinely: CESTAT (See 'Breaking News') Amma Wants Central GST also to be handed over to States + States meeting today on GST issue (See 'DDT') PM says Govt not to tolerate culture of corruption Our REITs, their REITs (See 'Edit' in 'Taxindiainternational.com') Service Tax collections surpass Rs. 51000 Cr. in four months Motor Vehicles Act to be amended to end corruption in RTO offices: Gadkari (See 'Mixed Buzz') Urban Development Minister seeks Action Plan from DDA & municipal bodies for regularization of unauthorized colonies (See 'Mixed Buzz') CBDT issues transfer order of 79 ACITs/DCITs (See 'Transfer' in Pitara) To dismantle Planning Commission PM invites ideas from public for creating new body CX - Clandestine manufacture and removal of Ingots without payment of duty cannot be alleged merely on basis of electricity consumption: CESTAT by Majority (See 'Breaking News') Independence Day – Modi’s Speech – Watching from a Neighbouring Country (See 'DDT' Column) Renewed confusion - ST on recovery agent's services (See 'ST se GST tak' Column)
 
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 SEARCH
 
TIOL Mobile App
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
  • 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