Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Custom
Circular No. 902/22/2009-CX
New Delhi, the 20th October 2009
To,
All the Chief Commissioner of Central Excise including LTU,
All Commissioners of Central Excise including LTU,
All Director Generals
Sir,
Subject: Assessable value in respect of goods manufactured on Job-work- Scope of
Rule 10A of the Central Excise Valuation (Determination of price of Excisable
goods) Rules, 2000 -reg
It has been brought to the notice of the Board that some manufacturers of Motor
Vehicles are getting complete Motor Vehicles manufactured by sending the Chassis
of the Motor Vehicles to independent body builders for building the body as per
the design/specification of the manufacturer. The practice followed is that the
Chassis is transferred to the Body builder on payment of appropriate Central
Excise duty on stock transfer basis and is not sold to them. The body builder
avails the Cenvat Credit of the duty paid on the chassis and clears the same on
payment of duty to the Depot/Sales Office/Distributer of the Motor Vehicle
manufacturer. The duty is discharged by the body builder on the assessable value
comprising the value of Chassis and the job charges. The Depot/Sales office of
the MV manufacturer sells the vehicles at a higher price than the price on which
duty has been paid. Similar practice may be prevailing in respect of other
commodities also.
- The matter has been examined. Rule 10A (ii) of the Central Excise Valuation
(Determination of Price of Excisable Goods) Rules, 2000 stipulates that where
the excisable goods are produced or manufactured by a job-worker, on behalf of a
principal manufacturer, then in a case where the goods are not sold by the
principal manufacturer at the time of removal of goods from the factory of the
job-worker, but are transferred to some other place from where the said goods
are to be sold after their clearance from the factory of job-worker, and where
the principal manufacturer and buyer of the goods are not related, and the price
is the sole consideration for the sale, the value of the excisable goods shall
be the normal transaction value of such goods sold from such other place at or
about the same time.
- A plain reading of the aforesaid provision of law makes it clear that the
assessable value for the purpose of charging Central Excise duty, in the cases
where the Job-worker transfer the excisable goods to the Depot/Sale
office/Distributer and/or any other sale point of the principal manufacturer,
shall be the transaction value on which goods are sold by the principal
manufacturer from such a place. Accordingly, after the insertion of Rule 10 A,
the practice of discharging the duty on cost construction method by the body
builder is not legally correct. It is, therefore, clarified that wherever goods
are manufactured by a person on job work basis on behalf of a principal, then
value for the purpose of payment of excise duty may be determined in terms of
the provisions of Rule 10 A of the Central Excise Valuation (Determination of
price of Excisable goods) Rules, 2000 subject to fulfilment of the requirements
of the said rule. It is requested that the practice followed in your zone may be
verified for body builders of motor vehicles and/or other commodities, which are
manufactured on job work basis to ensure that duty is paid correctly as per Rule
10A wherever required.
- Trade and Industry may be informed.
- Receipt of this circular may be acknowledged.
- Hindi version would follow.
Yours faithfully,
(Madan Mohan)
Under Secretary to the Govt. of India
F.No. 6/10/ 2009-CX.1