Taxindiaonline.com
Taxindiaonline.com Taxindiaonline.com TIOL Tube Taxindiainternational.com
 
LOGIN
Forgot Password |  Register
Friday , August 28, 2015 | Updated : Aug 28, 10:34 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
 
Govt aware of FTAs and dumping hurting Indian rubber and steel sectors: Minister (See 'Mixed Buzz') Tax paid by mistake - Why bring Section 11B into picture? (See 'Guest' Column) Cus - SCN u/s 124 - Petition seeking release of goods on ground that SCN was received after expiry of six months as stipulated u/s 110(2) - Petition dismissed as notice was despatched before expiry of six months: HC (See 'Breaking News') I-T - Whether income from sale of property acquired in past can be claimed as capital gains when assessee, engaged in developing housing project, failed to declare same in books audited every year - NO: HC (See 'Breaking News') ST - Chance taking petitioner - There is tendency of those persons who are liable to make payment of tax + interest + penalty to take chance before Court - Vigilant petitioner should have filed appeal within limitation period: HC (See 'Breaking News') Shillong Customs arrests two persons with gold worth over Rs 40 lakhs Govt okays bid to import 1000 tonnes of onion at Rs 45 per kg; MMTC directed to float fresh tender for import of 10,000 tonnes onion Law Commission submits Report on Draft Model Investment Treaty (See 'Mixed Buzz') Govt mulling over proposal to levy cess on air tickets Law Commission for amendments in Bribery of Foreign Public Officials Bill (See 'Mixed Buzz') Ministry of Tourism to give Rs 600 Crore for Tourism Development in Bihar (See 'Mixed Buzz') Govt selects 184 districts for equitable healthcare facilities: PM Shrawan Lal Meena, Principal Commissioner, Jaipur, passes away today morning; After working as IPS he had joined IRS in 1985; Cremation to be done at his native place in Jaipur CX - S 35C(2A) - If main provision cannot be treated as mandatory, first, second and third proviso also cannot be treated as mandatory but directory - Three provisos have to advance cause of justice and not to defeat it: HC (See 'Breaking News') Pressure builds on GST Balloon but CBEC continues to ... (See 'The Cob(Web)' Column) I-T - Whether when there is no pro rata transfer of land to developer, assessee can be made liable to pay capital gains tax with respect to remaining land for which no sum was received as development agreement was cancelled - NO: HC (See 'Breaking News') CESTAT – Appeals from UP to be filed at Allahabad (See 'DDT' Column) CX - While arriving at AV for RSP, an amount of abatement specified by notification can only be deducted - there is no provision under law to exclude warranty charges from RSP: CESTAT (See 'Breaking News') Free Home Delivery of Food – No Service Tax – Deputy Commissioner Clarifies + Huge Service Tax Demand on SEBI? (See 'DDT') Income tax - Whether merely because books of accounts are rejected, it does not mean that it must necessarily lead to addition in return of income - YES: HC (See '2015-TIOL-1966-HC') FTP – SEZ - Procedure for filing applications under MEIS and SEIS (See 'DDT' Column) ST - Employees of foreign parent deputed to work in India - Demand under reverse charge - when issue is squarely covered, there would be no justification for directing a pre-deposit: HC (See '2015-TIOL-1973') Cabinet okays amendments in Arbitration & Conciliation Bill Union Cabinet extends tenure of 7th Pay Commission upto Dec 31, 2015 India, Seychelles formally sign Tax Information Exchange Agreement today along with pacts in defence areas Neerja Mathur takes over as Member of Joint Electricity Regulatory Commission for Goa & UTs Govt aware of FTAs and dumping hurting Indian rubber and steel sectors: Minister (See 'Mixed Buzz') Tax paid by mistake - Why bring Section 11B into picture? (See 'Guest' Column) Cus - SCN u/s 124 - Petition seeking release of goods on ground that SCN was received after expiry of six months as stipulated u/s 110(2) - Petition dismissed as notice was despatched before expiry of six months: HC (See 'Breaking News') I-T - Whether income from sale of property acquired in past can be claimed as capital gains when assessee, engaged in developing housing project, failed to declare same in books audited every year - NO: HC (See 'Breaking News') ST - Chance taking petitioner - There is tendency of those persons who are liable to make payment of tax + interest + penalty to take chance before Court - Vigilant petitioner should have filed appeal within limitation period: HC (See 'Breaking News') Shillong Customs arrests two persons with gold worth over Rs 40 lakhs Govt okays bid to import 1000 tonnes of onion at Rs 45 per kg; MMTC directed to float fresh tender for import of 10,000 tonnes onion Law Commission submits Report on Draft Model Investment Treaty (See 'Mixed Buzz') Govt mulling over proposal to levy cess on air tickets Law Commission for amendments in Bribery of Foreign Public Officials Bill (See 'Mixed Buzz') Ministry of Tourism to give Rs 600 Crore for Tourism Development in Bihar (See 'Mixed Buzz') Govt selects 184 districts for equitable healthcare facilities: PM Shrawan Lal Meena, Principal Commissioner, Jaipur, passes away today morning; After working as IPS he had joined IRS in 1985; Cremation to be done at his native place in Jaipur CX - S 35C(2A) - If main provision cannot be treated as mandatory, first, second and third proviso also cannot be treated as mandatory but directory - Three provisos have to advance cause of justice and not to defeat it: HC (See 'Breaking News') Pressure builds on GST Balloon but CBEC continues to ... (See 'The Cob(Web)' Column) I-T - Whether when there is no pro rata transfer of land to developer, assessee can be made liable to pay capital gains tax with respect to remaining land for which no sum was received as development agreement was cancelled - NO: HC (See 'Breaking News') CESTAT – Appeals from UP to be filed at Allahabad (See 'DDT' Column) CX - While arriving at AV for RSP, an amount of abatement specified by notification can only be deducted - there is no provision under law to exclude warranty charges from RSP: CESTAT (See 'Breaking News') Free Home Delivery of Food – No Service Tax – Deputy Commissioner Clarifies + Huge Service Tax Demand on SEBI? (See 'DDT') Income tax - Whether merely because books of accounts are rejected, it does not mean that it must necessarily lead to addition in return of income - YES: HC (See '2015-TIOL-1966-HC') FTP – SEZ - Procedure for filing applications under MEIS and SEIS (See 'DDT' Column) ST - Employees of foreign parent deputed to work in India - Demand under reverse charge - when issue is squarely covered, there would be no justification for directing a pre-deposit: HC (See '2015-TIOL-1973') Cabinet okays amendments in Arbitration & Conciliation Bill Union Cabinet extends tenure of 7th Pay Commission upto Dec 31, 2015 India, Seychelles formally sign Tax Information Exchange Agreement today along with pacts in defence areas Neerja Mathur takes over as Member of Joint Electricity Regulatory Commission for Goa & UTs
 
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
   
 
 
 
Download TIOL App
TIOL SEARCH
 
TIOL Subscriptions
 All-In-One Package
 Indirect Tax Package
 Income Tax Package
<< More Packages>>
 
   
HOME    BACK TO TOP   
             
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
  • PMLA Notifications
  • 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 © 2015 Taxindiaonline.com Pvt.Ltd. All rights reserved. | Powered by 4th Dimension