Job work notification – matches included
Notification No. 214/86 – Central Excise has been amended to remove matches from the excluded category of final products. Under this notification, goods manufactured under job work for use in final products except matches are exempted from excise duty. Now the exception of matches is also removed, which means that exemption is available to all final products. This job work notification is the most confused and misunderstood notification in Central Excise. In my early days in the department, a senior officer told me that if you understand the SSI Notification, the job work notification and the Valuation provision (Section 4), you will have no problem in understanding anything in Central Excise.
This notification has to be understood together with the captive consumption exemption and the cenvat credit scheme. Excisable goods are liable to duty when cleared even for captive consumption, but then they are eligible for credit. Instead of paying duty at the time of captive use and then taking credit, which will only result in more records and no revenue, these goods are exempted. Similarly when goods are sent for job work, they can be cleared on payment of duty, the job worker can take credit and he can pay duty when the processed goods are returned and that duty can be taken as credit. Instead of this entire accounting circus, the job worker is exempted. The basic requirement for exemption is that the goods are covered under the Cenvat credit scheme and the exemption is only to avoid unnecessary documentation.
Now the Cenvat Credit Rules, 2002 had defined final products as all excisable goods except matches, but there is no such exclusion under the Cenvat Credit Rules, 2004. So there was no logic in having such an exclusion under the job work exemption Notification at least from 10.9.2004. But it continued there merrily for all these days and was obviously detected by a smart officer may be in his budget pursuit. And so it is removed in tune with the Cenvat scheme.
NOTIFICATION NO. , Dated: February 13, 2006