Introduction.

Before a product gets manufactured it has to undergo several processes. It may not be possible for an industry to carry all such processes within its premises. In such an eventuality the unit will have to opt for processing of the raw materials or intermediate product from outside. The processes performed outside are called ‘job work’. The law takes care of the need of a manufacturer for such job work. The provisions contained in the law in respect of job work are as follows

Rule 56B – special procedure for removal of finished excisable goods or semi- finished goods for certain purposes.

Under this Rule, an assessee can send semi-finished excisable goods for carrying out certain manufacturing processes or excisable goods for carrying out tests, with a prior permission of the Assistant Commissioner, to a job worker without payment of duty and to bring them back or remove them to another registered premises for removal on payment of duty or for export. The provisions of this Rule do not apply to the goods known as ‘prototypes’ sent out for trial or development tests. The benefit of this provision is available in respect of semi-finished excisable goods only if the manufacturing process to which such goods are subjected, does not result in a change in the sub-heading in which the goods have been classified.

Rule 57F(4) – removal of inputs as such or partially processed inputs in respect of which Modvat credit has been availed.

The provision has been explained in detail in the Chapter on Modvat.

Procedure under notification no.214/86-CE dated 25.3.86 (as amended).

This notification exempts specified items, if manufactured in a factory on job work basis. The exemption is available to the job worker only if the supplier uses the returned goods in the following manner

37. in or in relation to the manufacture of specified final products, or

i) on which duty of excise is leviable in whole or in part; or

ii) for removal to a unit in a Free Trade Zone or to a 100% EOU or to a unit in Electronic Hardware Technology Park or Soft Technology Parks or for supply to the United Nations or an International Organisations for this official use or for supply to the projects funded by them, on which exemption of duty is available under notification no.108/95-CE dated 28.8.95; or

iii) for removal under bond for export

38. cleared as such from the factory of the supplier of the raw materials or semi finished goods –

i) on payment of duty for home consumption; or

ii) without payment of duty under bond for export;

iii) without payment of duty to a unit in a Free Trade Zone or to a 100% EOU or to a unit in Electronic Hardware Technology Park or Soft Technology Parks or for supply to the United Nations or an International Organisations for this official use or for supply to the projects funded by them, on which exemption of duty is available under notification no.108/95-CE dated 28.8.95.

39. clears them for home consumption on payment of duty; or

40. sends them to another job worker for being used in the manner given at (a), (b) or (c) above.

Also the supplier is required to give an undertaking to this effect and to the effect of discharging the duty liabilities in respect of a final product, to the Assistant Commissioner of Central Excise having jurisdiction over the factory of the job worker. The supplier is also required to prod
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been used or removed in the manner undertaken.

Procedure under notification nos. 83/94 and 84/94 both dated 11.4.94 (as amended).

These two notifications are meant to facilitates SSI 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. 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.100 lakhs or Rs. one crore, for it to be eligible for this benefit.

Notification no.83/94 provides that the job worker will not be required to pay any excise duty if the specified goods received by him are used for making specified goods on job work basis and returned to the supplier for further manufacture. The supplier of the goods is required to give an undertaking to the proper officer having jurisdiction over the factory of the job worker that the specified goods received from the job worker will be used in the factory of the supplier in or in relation to the manufacture of specified goods which are exempt from the whole of the duty of excise leviable thereon under the Small Scale exemption notification and that in the event of his failure to do so he would pay excise duty, if any, payable on such goods. The waste generated during the course of job work is to be used in the manufacture of specified goods either within the factory of the job worker or within the factory of the supplier of specified goods for job work.