Import for Jobbing.pdf

Sanjay Dwivedi, Advocate

IMPORT FOR JOBBING

1. This note discusses procedure for duty free import of goods for job-work

under notification 32/97-Cus. This procedure applies if the substantial

quantity of raw materials are supplied by the customer and the importer

mainly carries out a labour job for him. The procedure is detailed below.

2. Notification 32/ 97-Cus dated 01.04.97 exempts imports from Customs

Duty and Additional Duty (CVD), if the goods are imported for execution

of an export order placed on the importer by the supplier of goods for

jobbing. In simple words, the notification visualizes job-work by an Indian

importer for a foreign customer. The foreign customer sends raw-materials

free [i.e. it is not a purchase by the Indian person]. The Indian person uses

the raw-materials for carrying out the desired process and returns the

resultant item back to the foreign customer. Obviously, there will be no

outflow of foreign exchange against the import.

3. The arrangement should be clear from the contract between the two parties.

Though the import will be free, the foreign supplier would have to declare

value of the goods for customs purposes – at the same time mentioning in

his invoice that the supply is free for carrying out jobbing as per terms of

the contract/ purchase order.

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4. The notification 32/97-Cus, specifies certain conditions to be observed.

Main conditions are that:

i. The jobbing is to take place in accordance with the procedure set out

in the ‘Customs (Import of Goods at Concessional Rate of Duty for

Manufacture of Excisable Goods) Rules, 1996’. A brief note on the

procedure is given later in this note.

ii. The foreign supplier should have placed an export order on us and the

imported goods should be used in execution of the export order. It

means that our foreign customer and the supplier of the import goods

need to be one and the same person.

iii. The imported goods should not be utilised for any other purpose. (Our

records should prove this)

iv. Export must take place within six months of the import. Dy.

Commissioner of Customs is empowered to extend this period. But in

absence of any guidelines for him, it becomes a pure discretion.

v. The FOB value of exports must be at least 10% more than CIF value

of imports. [In case of textile items mere positive value addition is

sufficient].

5. Procedure under Customs (Import of Goods at Concessional Rate of

Duty for Manufacture of Excisable Goods) Rules, 1996:

These are general-purpose rules. Many exemption notifications require

observance of the procedure under these rules. Usually it is prescribed

when the exemption is based on end use of the imported goods. The


notification 32/ 97-Cus also prescribes observance of procedure under these

rules.

The CBEC has issued Circular no. 46/96-Cus dated 30/8/96, explaining the

procedure and prescribing certain format for the purpose of the above rules.

Following steps are to be taken:

♦ Apply for registration under this rule to Deputy or Assistant

Commissioner of C. Excise (send application through Range Office).

No format of application is prescribed so a letter requesting for

registration will be required. (Draft enclosed). Please note that this

registration is separately required even if the manufacturer is already

registered under C. Excise Act, 1944.

♦ DC/ AC will issue certificate in form ‘Annexure II’ of the above

Circular.

♦ When we are to import the goods, we will have to

- Execute a bond (format as per Annexure IV).

- File application as per Annexure III, with DC/AC C. Excise

♦ The DC/AC of C. Excise will accept the bond and countersign the

Annexure III. Two copies of the Annexure III will be issued to us:

- One copy will be given in sealed cover addressed to AC of

Customs. This will be presented to Customs with Bill of Entry

for claiming exemption

- Another copy will be given to us for our records.


♦ Within two days of receipt of the imported goods we should inform to

our Range Office in Annexure V.

♦ We are required to maintain a register showing details of imports and

its consumption. Bill of Entry wise details should be available.

♦ Since exports are required to be correlated to the imports, we should

declare on the ARE-1 and shipping bills that

Following quantity of materials imported under notification 32/97-

Cus have been used in the quantity being exported under this

document

B/E no. Date

Description of the material

Quantity used

♦ Please remember that since the imports are duty free, we would not be

entitled to drawback benefits.

6. What is jobbing: The term jobbing has not been defined in the

notification. A question does arise whether the job-worker can add his own

material in performing the job-work or not. In the context of another

notification, Supreme court has explained the term ‘job-work’ in Prestige

Engineering (India) Ltd. V. CCE, Meerut [1994-(054)-ECR -0519 -SC =

1994-(073)-ELT -0497 –SC] as under

The Concise Oxford Dictionary assigns several meanings to the

expression 'job' but the relevant meaning having regard to the present


context is "a piece of work especially one done for hire of profit". The

expression 'job work' is assigned the following meaning : "work done

and paid for the job". The Notification, it is evident, was conceived in

the interest of small manufacturers undertaking job-works. The idea

behind the Notification was to help the job-workers-persons who

contributed mainly their labour and skill, though done with the help

of tools, gadgets or machinery, as the case may be. The Notification

was not intended to benefit those who contributed their own material

to the articles supplied by the customer and manufactured different

goods. We must hasten to add that addition or application of minor

items by the job-worker would not detract from the nature and

character of his work. For example, a tailor entrusted with a cloth

piece and asked to stitch a shirt, a pant or a suit piece may add his

own thread, buttons and lining cloth. Similarly, a factory may be

supplied the shoe uppers, soles, etc. by the customer and the factory

applies its own thread or bonding material and manufactures shoes

therefrom and supplies them back to the customer, charging only for

its work. The nature of its work does not cease to be job-work.

Thus, the job-worker cannot add substantial quantum of material from his

side. Circular No 18/2004-Cus dated 20.02.2004 issued by CBEC relies on

the above explanation of the term job-work to construe scope of ‘jobbing’

under notification 32/1997-Cus.

References:

1. Circular No. 46/96-Cus. dated 30/8/96 – describes the procedure

2. Circular No 18/2004-Cus, dated Feb 20, 2004 : explains what is jobbing. It

relies on judgment of Hon'ble Supreme Court in Prestige Engineering

(India) Ltd. Vs. CCE Meerut [1994 (073) ELT 0497 (S.C.)].


3. Circular No.26/2001-Cus, dated 24-04-2001: DEPB cannot be availed. It is

mandatory to mention in the body of the shipping bill that the

corresponding import was under 32/97 alongwith details of materials as

imported free of duty under 32/97. Destruction of waste discussed in

relation to earlier notification 81/95-Cus

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Documents

Import for Jobbing.pdf