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Indirect Tax Certification Course - Central Excise Rajesh Kumar T.R. Bcom, LLB, FCA, DISA 1 Slide 2 Revenue from different streams of taxes 2 Slide 3 Nature of tax Budget Estimates 2011-12 Revised Estimates 2011-12 Shortfall/ Excess Corporate tax3,59,9903,27,680-32,310 Income tax1,72,0261,71,879-147 Wealth tax6351,092457 Taxes of Union Territories1,9732,317344 Customs1,51,7001,53,0001,300 Union Excise Duties1,64,1161,50,696-13,420 Service Tax82,00095,00013,000 Total9,32,4409,01,664-30,776 3 Slide 4 Indirect Tax Revenues INR Crore Customs 186,694 Union Excise Duties194,350 Service Tax124,000 Total indirect tax revenue505,044 Other Tax RevenuesINR Crore Taxes of Union Territories/ Others3,555 Income tax195,786 Corporate tax373,227 Total direct & other duties572,568 4 Slide 5 Constitutional Aspects of Taxation 5 Slide 6 Part XII Finance, Property, Contracts and Suits Article 265 of the Constitution of India - No tax shall be levied or collected without the authority of law 6 Slide 7 Part XI Relation Btwn Union States - 245 Parliament Make Laws Whole or any part of the Territory of India State Legislature Whole or any part of the State No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation 7 Slide 8 Article 246 Parliament has exclusive power to make laws of matters covered in List I (union List) of VII Schedule State Legislature has exclusive power to make laws of matters covered in List II (State List) Concurrent List Both have powers 8 Slide 9 Seventh Schedule Union List- List -I Entry 83. Duties of customs including export duties. Entry 84. Duties of excise on tobacco and other goods manufactured or produced in India except- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. Entry 92C Taxes on Services Entry 97 - Any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists. State List- List - II Entry 51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. Entry 54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. 9 Slide 10 Duties of excise on tobacco and other goods manufactured or produced in India except: alcoholic liquors for human consumption; opium, Indian hemp and other drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance including in sub-paragraph (b) of this entry (eg. Medical syrups for cold/cough) Entry 84 of Union List 10 Slide 11 Entry 51 of state list Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:- alcoholic liquors for human consumption opium, Indian hemp and other narcotic drugs and narcotics but not including medicinal and toilet preparations containing alcohol or any substance included in sub- paragraph (b) of this entry 11 Slide 12 Entry 97 of Union List any other matter not included in List II, III and any tax not mentioned in list II or III This is residuary powers within the hands of Union. Challenge of levy of any new Central tax, has to pass the test of proving that it is beyond this residuary powers irrespective of what the tax is named/characterised as. 12 Slide 13 Basic Elements of Taxation Levy Will define the event upon which the duty/tax gets attracted Assessment Quantification of the levy attracted Collection The mechanism by which the Governments would collect the assessed tax 13 Slide 14 Levy collection meaning Somaiya Organics Ltd Vs State of UP, 2001 (130) ELT 3 (SC) the word collection in Art.265 would mean physical realization of tax, which is levied or imposed. Levy and collect are not synonymous terms. Levy means assessment or charging or imposition of tax, collect means physical realization. Levy and collection 14 Slide 15 Art.366(28) of Const. of India Taxation includes the imposition of any tax or impost, whether general or local or special, and tax shall be construed accordingly. Tax 15 Slide 16 The Central Board of Revenue Act, 1963 defines direct tax to mean any duty leviable or tax chargeable under Estate Duty Act, 1953, Wealth-tax Act, 1957, Expenditure Tax Act, 1957, Gift Tax Act, 1958, Income-tax Act, 1961, Super Profits Tax Act, 1963, Interest Tax Act, 1974, Hotel Receipts Tax Act, 1980, and any other duty or tax which, having regard to its nature or incidence, may be declared by the Central Government, by notification in the official gazette to be a direct tax. What is Direct Tax 16 Slide 17 Eri Beach Company Ltd Vs Attorney General of Ontario, AIR 1930 PC 10 direct tax is one which is demanded from the very person who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another. Courts views 17 Slide 18 Introduction to Central Excise Law 18 Slide 19 Central Excise Act, 1944 Rules CE Rules, 2002, Cenvat Credit Rules, 2004, CE (Appeal) Rules, 2001, CE (Advance Rulings) Rules, 2002, CE (Settlement of cases) Rules, 2007, CE (Removal of Goods at Concessional Rate of duty for manufacture of excisable goods) Rules, 2001, Sources of CE law 19 Slide 20 CE Valuation (Determination of Price of Excisable Goods) Rules, 2000, CE (Compounding of Offences) Rules, 2005, CE (Determination of Retails Sale Price of Excisable Goods) Rules 2008 Central Excise Tariff Act, 1985 Notifications Case laws and Circulars Sources of CE law 20 Slide 21 Charging/Levy Section - 3 There shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones)] which are produced or manufactured in India as, and at the rates, set forth in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 21 Slide 22 Elements of Levy Production/Manufacture In India Of Goods Excisable (Set out in 1 st & 2 nd Sch. To CETA subjected to duty) 22 Slide 23 Goods Manufactured in EOU and brought to other place in India Duties of Excise to be paid Amount equal to the aggregate of the duties of customs which would be leviable on like goods produced or manufactured outside India if imported into India. Valuation would be based on Customs Goods Manufactured by or on behalf of Government would be same like any other Mfr. Power to fix Tariff values to C.G. Sec. 3 Other Aspects 23 Slide 24 Manufacture includes any process, - i) incidental or ancillary to the completion of a manufactured product; AND ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; OR Manufacture Definition 2(f) 24 Slide 25 iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; Manufacture Definition 2(f) 25 Slide 26 Definition starts with the word includes 3 limbs in the definition 2 nd and 3 rd limb Deemed manufacture Manufacture - analysis 26 Slide 27 UOI Vs Delhi Cloth & General Mills Co.ltd, 1977 (1) ELT J.199 (SC) manufacture implies a change, but every change is not manufacture and yet change of an article is the result of treatment, labour and manipulation. But something is necessary and there must be transformation; a new and different article must emerge having a distinctive name and character or use. Also see South Bihar Sugar Mills ltd Vs UOI, 1978 (2) ELT J.336 (SC). Manufacture 27 Slide 28 Empire Industries ltd Vs UOI, 1985 (20) ELT 1 (SC) to constitute manufacture it is not necessary that one should absolutely make out a new thing because it is well settled that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand (scientifically). It is transformation of matter into something else that would amount to manufacture. That something is a question of degree. Manufacture 28 Slide 29 What comes out after processing is a different commercial commodity having its distinct character, use and name and is commercially known as such, is an important consideration in determining whether there is a manufacture. Manufacture 29 Slide 30 UOI Vs Parle Products, 1994 (74) ELT 492 (SC) - Whether or not something results in manufacture would depend on the facts of the case but any number of processes undertaken which do not result in a commercially different commodity cannot result in manufacture. Manufacture 30 Slide 31 Ujagar Prints Vs UOI, 1988 (38) ELT 535 (SC) Prevalent and generally accepted test to ascertain whether there was manufacture was whether the change or the series of changes brought by application of processes take the commodity to the point where, commodity can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged because of the result of the processes. Manufacture 31 Slide 32 There might be borderline cases where either conclusion can be reached with equal justification. Insistence on any sharp or intrinsic distinction between processing and manufacture results in an over simplification of both and tends to blur their interdependence in cases. Manufacture 32 Slide 33 Manufacture involves a series of processes. A process is one of the activities undertaken for manufacture of a product from input materials. Manufacture - processes 33 Slide 34 Conversion of jumbo rolls of photographic films into small flats and rolls in the desired sizes Indian Cine Agencies Vs CIT Purification and filtration done to product hydrochloric acid and sulphuric acid marketable in the international market CCEx Vs Alok Enterprises Process amounting to Manufacture 34 Slide 35 Process of slitting and cutting of steel sheets and polyester films, which are used for lamination, as the resultant product was not having different character, name and use. Pickling and oiling of metals as preparatory steps does not amount to manufacture Circular 927/17/2010 deemed in 2012 Process of cleaning used mobil oil doesnt amount to manufacture as no new commercial commodity comes into existance. Processes not amounting to Manufacture 35 Slide 36 Dictionary meaning of produce to bring forward, to bring forth or out, to bring (to a specified condition), to bring into existence or being, to work up from raw material, manufacture (material) objects. Hyderabad Asbestos Ltd Vs UOI, 1980 ELT 735 manufactured and produced were synonymous same test should be applied. Produced used in respect of natural items. Manufacture vs production 36 Slide 37 Processes which may not amount to manufacture in their natural meaning Brought under tax ambit by the artificial definition Processes mentioned in CETA as manufacture Third schedule in CETA repacking, re-labelling, putting or altering retail sale price etc. mostly consumer goods. Deemed manufacture 37 Slide 38 Processes which are specified in relation to any goods in the Section Notes or Chapter Notes to the First Schedule to CETA; Mere specification of a process in the Tairff entry not sufficient; Should be specifically stated that the process amounts to manufacture. Deemed Manufacture 2(f)(ii) 38 Slide 39 Chapter / Section Notes for Processes amounting to Deemed Manufacture Ores, Slag and AshProcess of converting ores into concentrate Marble, Granite, sandstone, etc Process of cutting or sawing or sizing or polishing of blocks or any other process of converting stone blocks into slabs or tiles Aluminium Tubes & Pipe The process of drawing or redrawing Iron and SteelProcess of drawing or redrawing a bar, rod, wire rod, round bar or any other similar article into bright bar. Process of galvanization Beverage, Spirit and Vinegar Labelling or relabelling of containers, or, packing or repacking from bulk packs to retail packs, or, adoption of any other treatment to render the product marketable to the consumer Deemed Manufacture 2(f)(ii) Example 39 Slide 40 Deemed Manufacture 2(f)(ii) Example Chapter / Section Notes for Processes amounting to Deemed Manufacture Misc edible preparationsLabelling or re-labelling of containers or re-packing from bulk packs to retail packs of pan masala, yeast, sauces, extracts from tea/coffee shall amount to manufacture Made up textile articles; sets; worn clothing & worn textile articles; rags Affixing brand name, labelling or re-labelling or repacking from bulk pack to small pack of readymade garments (Articles of Apparel) is manufacture Natural or coloured pearl; precious or semi precious stones; precious metals; Imitation jewellery; Coin Process of refining dore bar Sound recorders and reproducers Recording of sound or other phenomena on audio or video tapes shall amount to manufacture 40 Slide 41 Goods specified in Third Schedule to CETA Packing or repacking in a unit container Labelling or re-labelling of containers including the declaration or alteration of retail sale price on the container or Adoption of any other treatment on the goods to render the product marketable to consumer. Deemed manufacture 2(f)(iii) 41 Slide 42 Air Liquide North India Pvt. Ltd. Vs CCEx. [2011] 271 ELT 321 (SC) Relabeling and repacking of gas in small cylinders Helium gas rendered marketable to ultimate consumers thereof Amounts to manufacture Deemed manufacture 2(f)(iii) 42 Slide 43 Person who carries on the activity of manufacture. Job worker Brand owner not manufacturer Cibatul Ltd Vs UOI, 1978 (22) ELT 302 (SC) principal to principal basis. Should not be dummy. Manufacturer 43 Slide 44 Art.366(12) Goods include all materials, commodities and articles. Sale of Goods Act, 1930 section 2(7) Goods every kind of moveable property other than actionable claims and money; and includes stocks and shares, growing crops, grass and things attached to and forming part of the land which are agreed to be severed before sale or under the contract of sale. Goods 44 Slide 45 UOI Vs Delhi Cloth Mills, 1997 (1) ELT J.199 (SC), - in order to be goods, the articles must be capable of coming to the market to be bought and sold. Therefore the items must be moveable and marketable. Goods 45 Slide 46 Moveability: DCM case South Bihar Sugar Mills Vs UOI, 1978 ELT J.336 (SC) The articles must be something, which can ordinarily come or can be bought to the market to be bought and sold. As opposed to moveable goods, immoveable property cannot be brought to the market to be sold. Goods 46 Slide 47 Section 3(36) GC Act, 1897 moveable goods mean property of every description except immovable property Section 3(26) GC Act, 1897 immoveable property shall include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. Goods 47 Slide 48 Marketability: Capability of a product of being put into the market for sale. Union Carbide India ltd Vs UOI, 1986 (24) ELT 169 (SC) An article must be something which can ordinarily come to the market to be bought and sold. Articles in crude or elementary form are not dutiable as they are merely intermediary products and not goods. Aluminum cans or torch bodies produced by extrusion process neither sold nor marketable not goods. Goods 48 Slide 49 CCE Vs Ambalal Sarabhai Enterprises, 1989 (43) ELT 214 (SC) Duty of excise is on the manufacture of goods and for an article to be goods, it must be known in the market as such or must be capable of being sold in the market as goods. Actual sale is not necessary. Usage in captive consumption is not determinative of whether the article is capable of being sold in the market or is known in the market as goods. Goods 49 Slide 50 Even transient items/articles can be goods, provided they are known in the market as distinct and separate articles, having separate uses. Thus, goods with unstable character can be theoretically marketable if there was a market for such transient types of articles, but one has to be take a practical view on the basis of available evidence. Goods 50 Slide 51 Bhor Industries Ltd Vs CCE, 1989 (40) ELT 280 (SC) Merely because an article is specified under the Tariff, it would not be correct to state that it is chargeable to duty, unless it is proved that the goods are marketable. See also Ion Exchange India Ltd Vs CCE, 1999 (112) ELT 746 (SC) Goods 51 Slide 52 Number of purchasers not relevant. Does not confine to territorial limits of India. The fact that goods are not actually marketed is of no relevance nor is it necessary that the goods in question should be generally available in the market. APSEB case. Goods 52 Slide 53 Section 2 (d) of CE Act it means goods specified in the First and Second Schedules to the CE Tariff Act, 1985 as being subject to a duty of excise and includes salt. Explanation Goods include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. (2008 amendment) Excisable goods 53 Slide 54 CETA 1 st and 2 nd schedule Section wise each section has chapters each chapter heading/sub-heading. Tough mentioned in the said schedules, but with Blank at the rate column, not excisable goods Excisable goods 54 Slide 55 Point of levy & Collection Levy is on Manufacture, Collection is postponed as set out in Rules If levy attracted on the activity, the assessment would be based on removal CCE Vs. Vazir Sultan Tobacco Co. Ltd. 1996 (83) ELT (SC) Wallace Flour Mills Ltd Vs CCE, 1989 (44) ELT 598 (SC) & UOI Vs Nandi Printers P.Ltd, 2001 (127) ELT 645 (SC). 55 Slide 56 Courts views: The Province of Madras Vs Boddu Paidanna & Sons, 1978 (2) ELT J.272 (FC): Duties of excise were on manufacture or production of an article and although the expression duty of excise was wide enough to include sales tax, in view of the power expressly given to another authority to levy a sales tax, the said expression must be given a more restricted meaning than it might otherwise bear. Nature of Excise duty 56 Slide 57 In appeal before the Privy Council in Governor General in Council Vs Province of Madras, 1978 (2) ELT J.280 (PC) Excise was primarily a duty levied upon a manufacturer producer on the commodity manufactured or produced. Tax on goods and not on sales or sale proceeds. Courts views 57 Slide 58 There was no overlapping of excise duty and sales tax. R.C.Jall Parsi and Ors Vs UOI, AIR 1962 SC 1281 Excise duty is primarily a duty on production or manufacture of goods within the country. It is an indirect duty passed on to ultimate customer. Ultimate incidence will always be on the customer. Can be levied at any convenient stage. Courts views 58 Slide 59 CCE Vs Acer India Ltd, 2004 (172) ELT 289 (SC) Duty of excise is a tax upon goods and not sale or proceeds thereof. Taxable event is manufacture or production. Courts views 59 Slide 60 UOI Vs Bombay Tyres International, 1983 (14) ELT 1896 (SC): Ultimate incidence of an excise duty, a typical indirect tax, must always be on the consumer, who pays as he consumes or expends and it continues to be an excise duty on homemade goods, no matter at what stage it is collected. Courts views 60 Slide 61 Removal of Goods 61 Slide 62 Rule 4 - Removal RULE 4. Duty payable on removal. (1) Every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in rule 8 or under any other law, and no excisable goods, on which any duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided : [(1A) Notwithstanding anything contained in sub-rule (1), every person who gets the goods, falling under Chapter 61 or 62 or 63 of the First Schedule to the Tariff Act, produced or manufactured on his account on job work, shall pay the duty leviable on such goods, at such time and in such manner as is provided under these rules, as if such goods have been manufactured by such person : Provided that where any person had, instead of paying duty, authorized job worker to pay the duty leviable on goods manufactured in his behalf under the provisions of sub-rule (1A) as it stood prior to the publication of this notification, he shall be allowed to obtain registration and comply with the provisions of these rules within a period of thirty days from the date of publication of this notification in the Official Gazette.]. 62 Slide 63 Rule 4 - Removal (2) Notwithstanding anything contained in sub-rule (1), where molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty leviable on such molasses, in the same manner as if such molasses have been produced by the procurer. [(3) * * * ] (4) Notwithstanding anything contained in sub-rule (1), Commissioner may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods in any other place outside such premises, without payment of duty subject to such conditions as he may specify. 63 Slide 64 Rule 5 Date for determination RULE 5. Date for determination of duty and tariff valuation. (1) The rate of duty or tariff value applicable to any excisable goods, other than khandsari molasses, shall be the rate or value in force on the date when such goods are removed from a factory or a warehouse, as the case may be. (2) The rate of duty in the case of khandsari molasses, shall be the rate in force on the date of receipt of such molasses in the factory of the procurer of such molasses. Explanation. - If any excisable goods are used within the factory, the date of removal of such goods shall mean the date on which the goods are issued for such use. 64 Slide 65 Job Work under Central Excise 65 Slide 66 Dictionary Meaning Unabridged Dictionary: Work done by Job Chambers Dictionary: A task, bit of work Chambers Dictionary 66 Slide 67 Under notification 214/86 - CE Job work means i. Processing or working upon raw materials or semi-finished goods ii. Supplied to the Job worker iii. To complete a part of whole the process iv. Resulting in manufacture or finishing of an article or any operation v. Essential for the process 67 Slide 68 Job Work under Cenvat Credit Rules Similar definition as discussed under notification 214/86 CE dated 25.03.1986 68 Slide 69 Job Work under Valuation Rules Job Worker means a person i. Engaged in the manufacture or production ii. On behalf of the Principal manufacturer iii. From inputs and capital goods supplied by i. Principal manufacturer ii. Any person authorized by him 69 Slide 70 Supreme Court on Job Work Prestige Engineering No new article should be manufactured i.e. Job worker is a person contributing only labour and skill on the supplied materials. Job Worker should return the same article after processing to the customer An activity would not be job work when job worker contributes own material with material supplied to manufacture different goods. no new article should be manufactured at the hand of the job worker and he should return the same article after processing to the customer 70 Slide 71 Job work V/s Manufacture A job worker can be construed as a manufacturer depending on the process Process undertaken by Job Worker can either amount to manufacture or not Job worker would be construed as manufacturer even though the materials are not owned by the job worker 71 Slide 72 Hired Labour A person who hires himself out to work for and under control of another for wages. Controlled and supervised by manufacturer who hires them. A person who has no independent entity with separate establishment unit. However, if manufactures on own account, he cannot be said to have hired himself out. 72 Slide 73 Hired Labour V/s Job Work If master servant relationship or principal agent relation exists between raw material supplier and job worker. Raw material supplier would be the manufacturer 73 Slide 74 Valuation under Job work Excise duty in hands of job worker is not payable if materials / semi-finished goods are sent under: Notification 214/86 CE Cenvat Credit Provisions 74 Slide 75 Rule 10A of Valuation Rules This provision provides that Where goods are manufactured by job worker On behalf of principal manufacturer Duty would be payable on the sale value at which principal manufacturer sells the goods Sold from factory: transaction value Sold from depot: Normal transaction value Price is not sole consideration: Rule 6 of valuation rules For consumption by sister units: Rule 8 of valuation rules 75 Slide 76 Valuation upto March 2007 No specific provision in valuation rules Valuation was based on material cost + job charges The above mechanism was confirmed by Supreme Court in Ujagar Prints V/s CCE Pharmasia ltd If goods are under MRP- MRP less abatement 76 Slide 77 Job work under service tax Job work under sec 65(19)(v) Production or processing of goods for, or on behalf of, the client. (prior to 01.07.2012) After 01.07.2012 gets covered under service definition and is liable when process is not amounting to manufacture Exempted by Notification No. 25/2012-ST if : It is intermediate process as job work; and Person sending the goods would pay appropriate duty on final products. 77 Slide 78 Exemptions Exemptions from payment of duty when: Job work is under Cenvat provisions Job work under notification 214/86 Job work for SSI units 78 Slide 79 Job Work under Cenvat Rule 4(5)(a) allows manufacturer to send materials for job work. The goods after processing can be brought back for further processing Goods can also be dispatched directly from place of job work subject to permission from commissioner These are independent of exemption provided under notification 214/86 79 Slide 80 Job Work under Cenvat Contd. Goods should be returned within 180 days after job work Provision applies whether or not job work undertaken amounts to manufacture Any input can be sent under the said provision 80 Slide 81 Job work under notification 214/86 This notification was issued to grant exemption from job work amounting to manufacture Both raw material and semi-finished goods can be sent Exemption is available even if the activity results in intermediate product Exemption is available subject to the declaration to be filed with the jurisdictional officer of job worker 81 Slide 82 Job work under notification 214/86 Job worker would be exempt from all duties and cess subject to undertaking from principal manufacturer No time limit has been prescribed for return of goods Some inputs are excluded from provisions of the notification 82 Slide 83 Job work for SSI units As they dont pay duty, goods cannot be sent under cenvat provision SSI unit has to file a declaration to AC that goods after job work will be used in factory for manufacture of products exempt from duty SSI unit is also required to file another declaration to AC of job worker that goods will be used after job work Exemption is available only for goods covered by SSI exemption 83 Slide 84 Other removals Rule 16A allows for removal of: Inputs received in factory As such or after partially processed For further processing, testing, repair, re-conditioning Fulfillment of conditions specified by Commissioner of Central Excise 84 Slide 85 Removal of semi-finished goods Rule 16B The manufacturer subject to conditions of Commissioner can remove semi-finished goods The removal should be for carrying out manufacturing process 85 Slide 86 Sp. Procedure for excisable goods Rule 16C A manufacturer with specific permission can remove excisable goods For carrying out test or any process not amounting to manufacture The provision doesnt apply to proto type sent out for trial and development Conditions as specified in permission will have to be followed 86 Slide 87 Job Work V/s Works Contract - VAT A pure job work not liable to VAT i.e. there is no transfer of property Where there is transfer of property VAT would be applicable Works contract is a contract for work i.e. it involves use of both material and labour The tax can be levied only on the goods involved in the contract and not on contract If the job work transaction involves use or transfer of material, job worker would be liable for VAT 87 Slide 88 rajesh@hiregange.com rajeshkumartr@hotmail.com Questions???? 88