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
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
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
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
10. Entry 84 of Union List
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)
10
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
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
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
14. Levy and collection
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.
14
15. Tax
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.
15
16. What is Direct Tax
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.
16
17. Court’s views
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.
17
19. Sources of CE law
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,
19
20. Sources of CE law
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
20
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
22. Elements of Levy
Production/Manufacture
In India
Of Goods
Excisable (Set out in 1st & 2nd Sch. To CETA
subjected to duty)
22
23. Sec. 3 – Other Aspects
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.
23
24. Manufacture – Definition – 2(f)
“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
24
25. Manufacture – Definition – 2(f)
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;
25
26. Manufacture - analysis
Definition starts with the word “includes”
3 limbs in the definition
2nd and 3rd limb – “Deemed manufacture”
26
27. Manufacture
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).
27
28. Manufacture
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.
28
29. Manufacture
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.
29
30. Manufacture
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.
30
31. Manufacture
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.
31
32. Manufacture
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.
32
33. Manufacture - processes
Manufacture involves a series of processes.
A process is one of the activities undertaken for
manufacture of a product from input materials.
33
34. Process amounting to
Manufacture
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
34
35. Processes not amounting to
Manufacture
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 doesn’t amount to
manufacture as no new commercial commodity comes
into existance.
35
36. Manufacture vs production
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.
36
37. Deemed manufacture
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.
37
38. Deemed Manufacture 2(f)(ii)
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.
38
39. Deemed Manufacture 2(f)(ii) –
Example
Chapter / Section
Notes for
Processes amounting to Deemed Manufacture
Ores, Slag and Ash Process 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 Steel Process 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
39
40. Deemed Manufacture 2(f)(ii) –
Example
Chapter / Section
Notes for
Processes amounting to Deemed Manufacture
Misc edible
preparations
Labelling 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
Recording of sound or other phenomena on audio or
40
reproducers
video tapes shall amount to manufacture
41. Deemed manufacture 2(f)(iii)
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.
41
42. Deemed manufacture 2(f)(iii)
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
42
43. Manufacturer
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.
43
44. Goods
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.
44
45. Goods
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.
45
46. Goods
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.
46
47. Goods
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.
47
48. Goods
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.
48
49. Goods
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.
49
50. Goods
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.
50
51. Goods
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)
51
52. Goods
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.
52
53. Excisable goods
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)
53
54. Excisable goods
CETA – 1st and 2nd 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
54
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
56. Nature of Excise duty
Court’s 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.
56
57. Court’s views
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.
57
58. Court’s views
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.
58
59. Court’s views
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.
59
60. Court’s views
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.
60
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
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
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
66. Dictionary Meaning
Unabridged Dictionary:
Work done by Job
Chambers Dictionary:
A task, bit of work – Chambers Dictionary
66
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
68. Job Work under Cenvat Credit Rules
Similar definition as discussed under notification
214/86 – CE dated 25.03.1986
68
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
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
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
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
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
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
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
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
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
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
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
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
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
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
83. Job work for SSI units
As they don’t 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
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
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
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 doesn’t apply to proto type sent out
for trial and development
Conditions as specified in permission will have to
be followed
86
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
