Rule 10A of the Central Excise Valuation- Assessable value in respect of goods manufactured on Job-work-

F.No. 6/10/ 2009-CX.1
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Custom

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.

2. 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.

3. 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.

4. Trade and Industry may be informed.

5. Receipt of this circular may be acknowledged.

6. Hindi version would follow.

Yours faithfully,

(Madan Mohan)

Under Secretary to the Govt. of India

5 thoughts on “Rule 10A of the Central Excise Valuation- Assessable value in respect of goods manufactured on Job-work-

  1. r.b.popat

    In simple words value will be the total price (as it can fetch) at which the ready vehicle from the place of body builder (job worker)is removed and job worker will take cenvat credit of duty paid chasis and other material and services used to built the body.

  2. P. SIVARAMAKRISHNARAO

    According to Rule 10A, the excisable goods manufactured by jobworker by availing CENVAT Credit on inputs supplied by principal manufacturer and on his advise which (produced goods) have to be transferred to the Depot/Branch of the principal Manufacturer, then the jobworker has to discharge his excise liability on the basis of prevailing depot prices of the identical goods at or about the same time or nearest to the despatch of goods from his factory of manufacture, but the prevailing price is not known to the jobworker, he simply follows the price on which duty payable is given by his principal manufacturer. he does not know whether the price is correct as Rule 10A of Central Excise Valuation Rules (2000)

  3. Sunil

    If any body builder who has not taken cenvat from chassis receive from principal manufacture and build the body on the chassis and taken cenvat on the raw material purchased by him only. Now how he will clear the goods from his factory. please specify it?

  4. satyanarayana

    Whether the Transportation Charges paid by the Principal Manufacturer to the transporters and ultimately collected from his customers during Depot sales are includible in the Assessable Value of goods cleared to principal manufacturers Depots from Job workers premises. Please clarify

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