Saturday, June 13, 2009

Notification 86 214

NTF. NO. 214/1986-CE, DT. 25/03/1986

Exemption to specified items if manufactured in a factory as a job work and used in the manufacture of final products


In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), (herein after referred to as Special Importance Act), and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), the Central Government [OLD-the Central Government ], being satisfied that it is necessary in the public interest so to do [OLD - sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Govt.] hereby exempts goods specified in column (1) of the Table hereto annexed (herein after referred to as the "said goods") manufactured in a factory as a job work and:-

(In opening paragraph part "and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), the Central Government" has been substituted vide Ntf. No. 54/2004-CE, Dt. 09/11/2004)

(In opening paragraph bold part has been substituted vide Ntf. No. 20/2003-CE, Dt. 25/03/2003)

(a) used in relation to the manufacture of final products, specified in column (2) of the said Table,
(i) on which duty of excise is leviable in whole or in part; or

(ii)for removal to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or for supply to the United Nations or an international organisation for their official use or for supply to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Ntf. No. 108/95-C.E., dated the 28th August, 1995, or

(iii) for removal under bond for export, or

(iv) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or

(Sub-clause (iv) has been inserted vide Ntf. No. 49/2002-CE, Dt. 16/09/2002)
(b) cleared as such from the factory of the supplier of raw materials or semi-finished goods -
(i) on payment of duty for home consumption (on which duty of excise is leviable whether in whole or in part); or

(ii) without payment of duty under bond for export; or

(iia) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or

(Sub-clause (iia) has been inserted vide Ntf. No. 49/2002-CE, Dt. 16/09/2002)

(iii) without payment of duty to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Ntf. No. 108/95-C.E., dated the 28th August, 1995,


from whole of the duty of excise leviable thereon, which is specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), the additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act and National Calamity Contingent duty leviable under sub-section (1) of section 136 of the Finance Act, 2001 (14 of 2001). [OLD-which is specified in the Schedules to the Central Excise Tariff Act, 1985 ( 5 of 1986), the additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act. ]

(Above part has been substituted vide Ntf. No. 54/2004-CE, Dt. 09/11/2004)

(Above part has been substituted vide Ntf. No. 20/2003-CE, Dt. 25/03/2003)

[OLD -
from the whole of the duty of excise leviable thereon, which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).]

(2) The exemption contained in this notification shall be applicable only to the said goods in respect of which, -
(i) the supplier of the raw materials or semi-finished goods gives an undertaking to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise having jurisdiction over the factory of the job worker that the said goods shall be
(a) used in or in relation to the manufacture of the final products in his factory; or

(b) removed from his factory without payment of duty -(i) under bond for export; or
(ii) to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Ntf. No. 108/95-C.E., dated the 28th August, 1995;or

(iii) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or

(sub-clause (b)(iii) has been inserted vide Ntf. No. 49/2002-CE, Dt. 16/09/2002)
(c) removed on payment of duty for home consumption from his factory; or

(d) used in the manufacture of goods of the description specified in column (1) of the Table hereto annexed by another job worker for further use in any of the manner provided in clause (a), (b) and (c) as above.

(ii) the said supplier produces evidence that the said goods have been used or removed in the manner prescribed above; and

(iii) the said supplier undertakes the responsibilities of discharging the liabilities in respect of Central Excise duty leviable on the final products.

(Above Bold Word (1) & (2) has been amended vide Exc.Ntf. No.35/2000, Dt. 4-5-2000)

Explanation I. - For the purpose's of this notification, the expression "job work" means processing or working upon of raw materials or semi-finished goods supplied to the job worker/ so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process.
Description of inputs Description of final products
(1) (2)
All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than polyester filament yarn falling under heading 5402 and tariff item 54060010 [OLD- 54061000 ] [OLD- heading No.54.02 ], light diesel oil [OLD - light diesel oil ], high speed diesel oil and motor spirit, commonly known as petrol All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).

[OLD -
All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than matches.]

[OLD -
All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, -
i. matches
ii. fabrics of cotton or man-made fibres falling under chapter 52, chapter 54 or chapter 55 of the First Schedule to the said Act.
iii. fabrics of cotton or man made fibres falling under heading No. 58.01, 58.02, 58.06 (other than goods falling under sub-heading No. 5806.20), 60.01 or 60.02 (other than goods falling under sub-heading No. 6002.10) of the First Schedule to the said Act.]
(In above column (1) the figures "54060010" has been substituted vide NTF. NO. 48/2006-CE, DT. 30/12/2006)

(In above column (1) the figures and words "heading 5402 and tariff item 54061000" has been substituted vide NTF. NO. 20/2006-CE, DT. 01/03/2006)

(Entry in column (2) has been substituted vide NTF. NO. 02/2006-CE, DT. 13/02/2006)

(In column (1) words "light diesel oil" has been substituted vide NTF. NO. 26/2004-CE, DT. 09/07/2004)

(Column (2) has been substituted vide Ntf. No. 20/2003-CE, Dt. 25/03/2003)

(In column (1) words "light diesel oil, high speed diesel oil" has been substituted vide Ntf. No. 16/2003-CE, Dt. 01/03/2003)



Notification No. 214/86-C.E., dated 25.3.1986 as amended by Notifications no. 218/86-C.E., dated 2-4-1986; No. 350/86-C.E., dated 20-6-1986; no. 12/87-C.E., dated 23-1-1987; No. 81/87-C.E., dated 1-3-1987; No. 204/87-C.E., dated 9-9-1987; No. 145/90-C.E., dated 17-9-1990; No. 79/91-C.E., dated 25-7-1991; No. 60/94-C.E., dated 1-3-1994; No. 117/94-C.E., dated 27-6-1994; No.133/94-C.E., dated 21-10-1994; No. 68/95-C.E., dated 16-3-1995; No. 91/95-C.E., dated 18-5-1995; No. 96/95-C.E., dated 26-5-1995; No. 20/96-C.E., dated 23-7-1996; No. 59/97-C.E., dated 30-8-1997, 60/97-C.E., dated 1-9-1997; Ntf. No. 33/2000-C.E., dated 31-3-2000; Ntf. No. 35/2000-C.E., dated 5-4-2000; and Ntf. No. 31/2001-CE(NT), dated 21-6-2001 & Ntf. No. 5/2002-CE(NT), Dt. 1/3/2002.


(Please refer Cir No.637/28/2002-CX,Dt.08/05/2002)

Cenvat on Mobile phones

The judgment, that the entire India Inc has been keenly waiting for is finally out. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favour of the industry and held that service tax paid on mobile phones is eligible for availing Cenvat credit.
Earlier, the Ministry of Finance had clarified that “Credit of Service Tax paid on Telephones: In regard to credit of service tax on telephone connection, queries have been raised as to whether service tax credit would be admissible on telephone sets installed only in the business premises. The answer is in the affirmative, and credit will be allowed only on telephone sets installed in the business premises. Mobile phones are not covered.”
But who will challenge the ministry circular, more so since the service tax component on such mobile phone usage is very small and appeals to the tribunal involving meagre amounts always face the risk of being shown the door.
Fortunately, despite such a situation, CESTAT in the present case felt it appropriate to entertain the appeal of the company and pass an order on the same, as it was a recurring issue.
The period involved in the case was December 2004 to February 2005 and after hearing both sides, the tribunal observed that the old circular dated of 2003 on which sole reliance has been placed to deny the credit of service tax was relevant under the old service tax credit rules, 2002 which required the telephones to be installed in the business premises of the service provider.
Further, CESTAT said that since no such stipulation exists in the new Cenvat Credit Rules, 2004, the old circular could not be pressed into service. Also, rule 4(1) of the Cenvat Credit Rules, 2004 states that credit in respect of inputs may be taken on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of the output service and there is no stipulation regarding receipt of input service, which is separately defined under the rules.
That is not all the tribunal clarified that sub-rule (7) of rule 4 merely provides that Cenvat credit in respect of input service shall be allowed on or after the date on which the payment is made for value of input service and service tax paid or payable is indicated in the invoices, bills or challans.
The tribunal observed...
: that there is no provision anywhere in the rules disallowing credit of service tax paid on mobile phones, which in any case is fast replacing fixed line phones in many establishments. And in the absence of any express prohibition under the new Cenvat Credit Rules, 2004, service tax paid on mobile phone is available as credit to eligible service providers of output service and manufacturers. CESTAT set aside the order of the lower appellate authority and the appeal was allowed.

Rule 4 of the Cenvat credit rules clearly defines that the credit available on any service can be utilised while paying duty on output service or product. We can very well adjust the credit available on mobile bills PROVIDED THE MOBILES ARE REGISTERED ON THE SAME NAME OF THE COMPANY ETC. WHO IS LIABLE TO PAY THE OUTPUT DUTY

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