Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com HRindiaonline.com
 
LOGIN
Forgot Password |  Register
Wednesday , April 1, 2015 | Updated : Apr 1, 17:28 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
 
e-Commerce Exports - customised fashion garments, toys, leather footwear etc having FOB of Rs 25000 per consignment to get incentive New FTP adds Vizag + Bhimavaram in list of Town of Export Excellence e-Commerce exports to be allowed under courier regulations from Delhi, Mumbai & Chennai only New FTP promises simpler procedure for exit of STP & EHTP Units & debonding Export of dual use items (SCOMET) - FTP extends authorisation period from one yr to two years Relief for EoUs - Period of five years for NEE extended by one year Effective Supply Chain - New FTP allows inter unit transfer of goods & services among EoUs, EHTPs STPs and BTPs DGFT to introduce facility for online application for refund of TED New FTP promises higher rewards for high domestic content and value addition EPCG Scheme - FTP reduces export obligation for domestic procurement Recognition of status holder - US Dollar in place of Rupee to be considered New FTP - Service Exports from India Scheme (SEIS) to reward all service providers located in India; No discrimination against foreign brands Nomenclature of Export House & Star Export House changed to One, Two, Three, Four & Five Star Export House DGFT says New FTP has gone for mega procedural simplification; If CAs file papers with digital signature NO physical documents required FTP - Boost to 'Make in India' - Lesser export obligations if greater local raw materials are used 852 New Tariff Lines added for receiving exports benefits New FTP - Chapter 7 goes to deemed exports & SEZ deleted New FTP - DGFT Pravir Kumar thanks CBEC for agreeing to 90% of their proposals SEZs to reap benefits from Merchandise Export Promotion Scheme E-Commerce export creating employment to be eligible for exports benefits Minister announces duty scrips under New Schemes to be fully transferable FTP 2015-2020 introduces TWO New Schemes - one for merchandise and other for services New FTP to encourage exports of labour-intensive, high-tech and eco-friendly products India's exports faces greater internal challenges than external: Commerce Minister OMCs reduce diesel price by Rs 1.21 per litre and petrol by 49 paise Govt to release Five-Year Foreign Trade Policy at 3.30 PM today; likely to merge many export promotion schemes & focus on services exports Govt releases Rs 2303 Cr to AP in addition to Rs 1803 Cr released on Mar 31 RBI okays ING Vysya & Kotak Mahindra Bank merger w.e.f today Service Tax could not be paid yesterday - Will Board extend time? (See 'DDT') Cus - merely on basis of Chartered Engineer's report, which is based on enquiry conducted behind appellant's back & which had not even been supplied to appellant, declared transaction value cannot be rejected: CESTAT by Majority (See 'Breaking News') Tariff Value of Gold, Silver Increased - oils, brass scrap, poppy seeds Tariff values reduced (See Cnt 34 in 'What's New') Income tax - Whether when it is clearly mentioned that amendment in the statute is substantive in nature, assessee has option to avail benefits even on retrospective basis - NO: Supreme Court (See 'Breaking News') Service Tax - Changes effective from today (See 'DDT') ST - Appellant vide letter addressed to CCE had sought direction as to whether their activities would attract ST & whether they are eligible for any exemption - SCN dt. 18.10.2013 demanding ST on said activities is blatantly time-barred: CESTAT (See 'Breaking News') ST - VCES - Order of Rejection Appealable? SC keeps issue for another day (See 'DDT')
 
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
   
 
 
Subscribe to TIOLTube
Download TIOL 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
  • MISC Circulars
  • 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
  • Press Note
  • 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
  • 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