Job Work – Case Laws

Relevant Case Laws – Extent to Which Input is Considered Job Work

Case Name Citation In Brief

Prestige Engineering v. (1994) 6 SCC The Apex court held that when job worker contributes his own
CCE 465 material for manufacture of goods along with the goods supplied by
customers and manufactures different goods, it does not amount to job
work. However, addition of minor items by job worker would not
detract it being a job work.

Commissioner of Sales 2009 (26) The main raw material is imported steel plates which are supplied by
Tax Vs. Auto Comp VST 30 Telco. The steel plates belong to Telco and the respondent only
Corporation (Bombay) converts the said steel plates into the assembly flange. In converting
these steel plates into assembly flange the respondent undoubtedly
uses some of its own material but the contract of conversion of steel
plates under the assembly flange is single and indivisible and the
passing of the property in the goods of the respondent used in the said
conversion is incidental to the main contract which is the works
contract.

The Commissioner of (2010) 32 It is common that whenever a contractor takes works contract like
Sales Tax, M.S., Mumbai VST 56 repairing of building and/or construction of building in which he has
v. M/s Moonlight Metal to use some quantity of his own material for completion of job. If
Industries Pvt.Ltd contractor uses small quantity of its own material and same is
transferred to the customer after completion of works contract it does
not amount to sale of goods.

Preventive Engineering 1994 (73) When a person adds/contributes his own material to the material
(India) Excise Law supplied by the customers and manufactures goods, it is not job-work.
Limited v. Commissioner Times, Pg. It could be job-work only if the worker adds from his end only minor
of Central Excise 497. items or minor or incidental items.

Madura Coats Limited vs 1980 (6) ELT The use of negligible percentage of job workers own material was
Collector Of Central 582 Cal. held to be of an incidental nature.
Excise
SJS Plastiblends Pvt Ltd 2019 SCC 6. It is apparent from the decisions of the Hon'ble Supreme Court
v Commissioner of OnLine in International Auto Ltd v. Commissioner of Central Excise,
Central Excise Nagpur, CESTAT Bihar [(2005) 183 ELT 239 (S.C.)] and of the Tribunal in Umesh
Kendra 6209 Rai v. Commissioner of Central Excise & Customs, Vapi [(2009) 244
ELT 138 (Tri.-Ahmd)] and in Suvikram Plastex (P)
Ltd v. Commissioner of Central Excise [(2008) 225 ELT 282 (Tri.
Bang.)] that job-worker is not transformed as independent
manufacturer merely because of their own material being deployed. 

S.B. Reshellers Pvt. Ltd v 2019 SCC Placing reliance on Prestige Engineering, it was observed that
Division - III, OnLine Mah additional application of minor items is permissible in job work.
Commissionerate AAR-GST 17
Kolhapur
Federal Mogul Goetze 2012 SCC The job worker, in addition to using the material supplied by the
India Ltd. v The OnLine principal manufacturer, may use his own material for undertaking the
Commissioner of Central CESTAT 82 job work and the job charges collected by him will, obviously, include
Excise, Bangalore the cost of his own material used by him for the job work. In other
words, “in respect of job-worked item” the raw materials are
contributed partly by the principal manufacturer and the rest by the
job worker.

Navbharat Packaging 1996 (64) Considering that the additions made by the appellants in the form of
Indus. Ltd. vs. Collector ECR clipping and slitting in the process of corrugating cartons would not be
of Central Excise 525(Tri.- of substantial value. The manufacture appears to have resulted mainly
Mumbai) from the raw-material contributed by the respondents, the court was of
the view that the ratio of the judgment of the Apex Court in the case
of Prestige Engineering (India) Ltd. v. Collector of Central Excise is
applicable to this case.

Hindustan Mudran vs. (1998) 9 SCC Newsprint and manuscripts supplied by newspaper owners and
Collector of Central 153 newspapers were returned after printing. Only the printing job was
Excise, Pune   done by the appellants in the press, therefore the job work which was
being done by the appellants fell within the ambit of Notification. No.
119/75-CE and they were entitled to the benefit of the said
notification. Reliance was places on Prestige Engineering (India) Ltd.
v. CCE. In the present judgment, it was held that – "In view of the
decision of this Court in Prestige Engineering (India) Ltd., and having
regard to the findings that have been recorded by the Assistant
Collector in the present case that the appellants were getting the
 newsprint from Tarun Bharat and the editing was also being done by
Tarun Bharat and only printing job was to be done by the appellants in
the press, it must be held that the jobwork which was being done by
the appellants fell within the ambit of Notification No. 119/75-CE
dated 30.4.1975 and the appellants were entitled to the benefit of the
said notification.

Sneh Silicate Industries 2006 (108) Benefit of exemption under notification No. 214/86-CE denied on the
vs. C.C.E. ECC 631 ground that in addition to the raw materials supplied by the company,
the applicants were also procuring bleaching powder and silicate from
their own account and using in the processing of the goods. The Court
placed reliance on Prestige Engineering (India) Ltd. v. CCE, and
reiterated the fact that addition of minor items by job worker would
not detract it being a job work.

CC v. Suraj Fine 2013 (295) It was held that in absence of any restriction in notification the job
Chemicals E.L.T. 32 worker can use his own material in job work.
(Bom.)

The Central Government vide circular no. 34/8/2018-GST dated 1st March 2018, adopts the
principles laid down by the judicial precedents. It was also clarified in the circular no. 38/12/2018 as
follows: Further, it is clarified that the job worker, in addition to the goods received from the
principal, can use his own goods for providing the services of job work.