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Rule 4(5)(a)

Goods first received by Manufacturer and then sent to Jobworker

 

We know that on receipt of goods by manufacturer, he immediately claims CENVAT on the same

However, if such goods are later sent to jobworker, they move out of factory

 

However no Excise duty is payable in such cases as per rule 4(5)(a)) of CCR, which says that Cenvat credit will be allowed on same if they are received back within 180 days/ 2 years in case of Capital Goods

 

The manufacturer has to maintain appropriate records to prove that these are received within the period of 180 days/2 years

 

Note:-

The Goods may be sent to Jobworker for any purpose like

  • further processing,
  • testing,
  • repairing,
  • re-conditioning or
  • for the manufacture of intermediate goods necessary for the manufacture of final products

 

Goods Sent Directly to Jobworker

The credit can be availed even if any inputs or capital goods are directly sent to a job worker without their being first brought to the premises of the manufacturer/ output service

The period of 180 days or 2 years, will be counted from the date of receipt of such goods by the job worker

 

Goods Not Received Within 180 days/2 years

However, if they are received after 180 days/2 years, Cenvat taken on them need to be reversed

 

However, if they are later received after 180 days/2 years, still Cenvat can be retaken on these

 

Note:-The condition of return within 2 years is not in case of jigs, fixtures, moulds, dies.

This is because these are generally consumed during production

Hence, even if these are not received back within 2 years, still input available on the same

 

Effect of Amendment

Till 28.2.15

From 1.3.2015

Period of return was

180 days for both Inputs and Capital Goods

 

 

 

(except tools/dies/jogs/fixtures)

 

Period of return is

180 days for Inputs

And

 

2 years for Capital Goods

 

(except tools/dies/jogs/fixtures)

 

No provision for goods directly sent to Jobworker

Now Goods can be directly sent to Jobworker

  1. Indirect Tax
  2. Amendments Indirect Tax for November 2016 Exams
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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