1. Indirect Tax Certification Course - Central Excise
Rajesh Kumar T.R.
B’com, LLB, FCA, DISA

2. Revenue from different streams of taxes

3. Nature of tax
Budget Estimates
Revised Estimates
Shortfall/Excess
Corporate tax
3,59,990
3,27,680
-32,310
Income tax
1,72,026
1,71,879
-147
Wealth tax
635
1,092
457
Taxes of Union Territories
1,973
2,317
344
Customs
1,51,700
1,53,000
1,300
Union Excise Duties
1,64,116
1,50,696
-13,420
Service Tax
82,000
95,000
13,000
Total
9,32,440
9,01,664
-30,776

4. Indirect Tax Revenues
INR Crore
Customs
186,694
Union Excise Duties
194,350
Service Tax
124,000
Total indirect tax revenue
505,044
Other Tax Revenues
INR Crore
Taxes of Union Territories/ Others
3,555
Income tax
195,786
Corporate tax
373,227
Total direct & other duties
572,568

5. Constitutional Aspects of Taxation

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

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

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

9. Seventh Schedule State List- List - II 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.

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)

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

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.

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

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.

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.

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.

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.

18. Introduction to Central Excise Law

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,

20. Sources of CE law Central Excise Tariff Act, 1985 Notifications
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

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

22. Elements of Levy Production/Manufacture In India Of Goods
Excisable (Set out in 1st & 2nd Sch. To CETA subjected to duty)

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.

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

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;

26. Manufacture - analysis
Definition starts with the word “includes”
3 limbs in the definition
2nd and 3rd limb – “Deemed manufacture”

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).

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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

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 reproducers
Recording of sound or other phenomena on audio or 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.

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

43. Manufacturer Person who carries on the activity of manufacture.
Job worker
Brand owner not manufacturer – Cibatul Ltd Vs UOI, (22) ELT 302 (SC) – principal to principal basis.
Should not be dummy.

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.

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.

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.

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.

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.

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.

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.

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, (112) ELT 746 (SC)

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.

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)

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

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 (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).

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.

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.

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.

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.

60. Court’s views
UOI Vs Bombay Tyres International, 1983 (14) ELT (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.

61. Removal of Goods

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.].

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.

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.

65. Job Work under Central Excise

66. Dictionary Meaning Unabridged Dictionary: Work done by Job
Chambers Dictionary:
A task, bit of work – Chambers Dictionary

67. Under notification 214/86 - CE
Job work means
Processing or working upon raw materials or semi-finished goods
Supplied to the Job worker
To complete a part of whole the process
Resulting in manufacture or finishing of an article or any operation
Essential for the process

68. Job Work under Cenvat Credit Rules
Similar definition as discussed under notification 214/86 – CE dated

69. Job Work under Valuation Rules
Job Worker means a person
Engaged in the manufacture or production
On behalf of the Principal manufacturer
From inputs and capital goods supplied by
Principal manufacturer
Any person authorized by him

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

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

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.

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

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

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

76. Valuation upto March 2007 If goods are under MRP- MRP less abatement
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

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 )
After – 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.

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

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

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

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

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

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

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

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

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

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

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