Whether service tax leviable on conversion from Aluminium Ingots to Aluminium castings on job work?

PJ/Case Law /2016-17/3271

Case:- MANISH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I

Citation:- 2016 (42) S.T.R. 352 (Tri. - Mumbai)

Brief Facts-The facts of the present case are that the appellant is providing the job work by converting Aluminium Ingots to Aluminium casting which amounts to manufacture. The Revenue contended that appellant is providing labour which falls under ‘Manpower Recruitment Agency Services’, accordingly they are liable to pay Service Tax for the period 2007-08 and 2008-09. The adjudicating authority has confirmed the demand and imposed penalty. Aggrieved by the said adjudication order appellant filed appeal before the Commissioner (Appeals) who upheld the Order-in-Original by passing the impugned order therefore appellant appeared before the Tribunal.

Appellant’s Contentions:-Ms. Padmavati Patil, ld. Counsel for the appellant submits that they deputed the man power to carry out the job work on the basis of quantum of production on the material supplied by their client. The payment for the labourers is not made towards salary/wages on the basis of number of labourers, payment is made on the basis of quantum of production carried out by the job worker, therefore they are not providing manpower. They are only carrying out job work for their client. The activity amounts to manufacture which is excluded from the provisions of Service tax under the head of ‘Business Auxiliary Services’ on behalf of the client. She also submits that in any case the job work on the material supplied by the client is exempted service by virtue of Notification No. 8/2005-S.T., dated 1-3-2005. In support of her submission, she placed reliance on the judgments in case of Hemant V. Deshmukh v. Commissioner of C. Ex., Goa [2014 (35) S.T.R. 602 (Tri.-Mumbai)].

Respondent’s Contentions:- On the other hand, Shri S.L. Karoliya, ld. Asstt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.

Reasoning Of Judgement:- The Tribunal carefully considered submissions made by both sides. The undisputed fact in this case is that appellant has carried out job work on behalf of their client, i.e., conversion of Aluminium Ingots to Aluminium Castings. The charges for the job work are based on the quantum of production and not against supply of manpower. Therefore activity remains as production on behalf of the client in the factory of the client. In this fact though the appellant was deputing the manpower but services which carried out were job work in the client’s factory, the said activity amounts to manufacture, hence, does not fall under category of Manpower Recruitment Services. Since activity of the appellant amounting to manufacture of the goods, even it is not covered under Business Auxiliary Services, as manufacturing activity stands excluded in the definition to Business Auxiliary Services. We also agree with the ld. Counsel that if it is considered as taxable activity, the same is exempted under Notification No. 8/2005-S.T., dated 1-3-2005. On going through judgment cited by the ld. Counsel, we find that the ratio of the judgment squarely applicable to the facts of the present case. In view of the above discussions, we set aside the impugned order and allow the appeal of the appellant with consequential relief, if any, in accordance with law.
Decision:- Appeal allowed.

Comment:-The gist of the case is that since the assessee carried out the job work of conversion of Aluminium Ingots into Aluminium Castings in client’s factory and on their behalf and charges thereof were received on the basis of quantity produced and not against number of labourers deputed, therefore such an activity amounts to manufacture and hence, not covered under Manpower Recruitment Agency service under Sections 65(68) and 65(105)(k) of Finance Act, 1994.This activity is also not covered under Business Auxiliary service. Therefore service tax is not leviable.

Prepared By:- Praniti Lalwani

Comments

PJ/Case Law /2016-17/3271

Post a Comment

Query