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
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
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
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.