Custom, Excise & Service Tax Tribunal
M/S. Munish Forge Pvt. Ltd vs C.C.E & S.T. , Ludhiana on 14 March, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, PRINCIPAL BENCH NEW DELHI
Date of Hearing/Decision:14.03.2014
Service Tax Stay Application No.56265/2013 in
Appeal No. S. T. 55929 of 2013-CU (DB)
[Arising out of Order-in-Appeal No. 300/ST/Appeal/Ldh/12 dated 6.12.2013 passed by the Commissioner of Central Excise (Appeals), Chandigarh-I]
For approval and signature:
Honble Mr. Justice G. Raghuram, President
Honble Mr. Rakesh Kumar, Member (Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
M/s. Munish Forge Pvt. Ltd. Appellant
Vs.
C.C.E & S.T. , Ludhiana Respondent
Appearance: Shri Kamaljeet Singh, Advocate for the Appellant Shri Govind Dixit, DR for the Respondent CORAM : Honble Mr. Justice G. Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO:51720/2014 dated 14.03.2014 Per Rakesh Kumar:
The facts leading to filing of this appeal and stay application are, in brief, as under:-
1.1 The appellant are a job worker. They received rounds from M/s.Dev Arjuna Cast & Forge Pvt. Ltd., Village - Gobindgargh, Ludhiana, for job work and subjected the same to the cutting and bending and returned the processed goods without payment of duty to principal manufacturer who used the same in the manufacture of scaffolding items. The principal manufacturer had given an undertaking in terms of notification no.214/86-CE undertaking to use the goods received from the appellant job-worker for manufacture of their final product and clear the same on payment of duty. The department was of the view that the appellant are providing Business Auxiliary Services (production of goods not amounting to manufacture) to their principal manufacturer - M/s. Dev Arjuna Cast & Forge Pvt. Ltd. and accordingly, issued a show cause notice dated 27.09.2011 to them for demand of service tax amounting to Rs.10,83,469/- under Section 73 of the Finance Act, 1994, alongwith interest thereon under Section 73 and Section 75 of Finance Act, 1994 and also for imposition of penalty on them under Section 76, 77 and 78 ibid. The service tax demand was for the period 2006-07 to 2009-10.The show cause notice was adjudicated by the Addl. Commissioner vide order-in-original dated 30.03.12 by which the above mentioned service tax demand was confirmed against the appellant along with the interest and besides this, penalties were imposed under Section 76, 77 and 78 of the Finance Act, 1994. Though before the Addl. Commissioner, the appellant pleaded that they were availing the exemption under notification no.214/86-CE and in this regard undertaking to use the job work goods in the manufacture of final products had been given by the principal manufacturer M/s. Dev Arjuna Cast & Forge Pvt. Ltd., who had cleared the final products on payment of duty and, therefore, in view of exemption Notification No. 8/2005-ST dated 1.3.2005, there is no service tax liability on them, this plea was not accepted by the Addl. Commissioner on the ground that the appellant have not supplied/adduced any documentary evidence to show as to how the job work goods have been used in or in relation to the manufacture of final products by the principal manufacturer. On appeal being filed to the Commissioner (Appeals), the above order of the Addl. Commissioner was upheld vide order-in-appeal dated 6.12.2012 except for setting aside of the penalty under Section 76 and 77. Against this order of the Commissioner (Appeals), this appeal has been filed along with stay application.
2. Though the matter was listed for hearing of the stay application only, after the matter heard for sometime, the bench was of the view that the matter can be taken up for final hearing. Accordingly, with the consent of both the sides, the matter was heard for final disposal.
3. Shri Kamaljeet Singh, ld. Advocate for the appellant, pleaded that the processes undertaken by the appellant amount to manufacture, that they were availing exemption under notification no.214/86-CE dated 25.3.86 as a job worker against an undertaking given by the principal manufacturer to use the job work goods in the manufacture of finished products and clear the same on payment of duty, that the Addl. Commissioner as well as Commissioner (Appeals) have erroneously concluded that the job work goods have not been used by the principal manufacturer in the manufacture of final products on which the duty has been paid and have wrongly denied the benefit of exemption under notification no.8/2005-ST dated 1.3.2005, that during the period of dispute, the appellants client- M/s. Dev Arjuna Cast & Forge Pvt. Ltd., who is the principal manufacturer, was manufacturing an item named Lever Nut, which is a scaffolding item for supply to M/s. L & T Ltd., that a part handle for this scaffolding item was got manufactured on work basis by the principal manufacturer through the appellant out of the rounds supplied by them, that the appellant was performing the processes of cutting, bending and threading on the rounds and also some finishing processes like heat treatment and shot blasting, etc. were also undertaken on the job work item, that by these processes, a different item- handle having a distinct name, character and uses emerges and for this reason only, they were availing the exemption under notification no.214/86-CE, that this process, therefore, cannot be treated as the Business Auxiliary Services of production of goods not amounting to manufacture, that in any case, since the goods supplied by the appellant to the principal manufacturer have been used by the principal manufacturer in production of the final products, which were cleared on payment of duty, they are also eligible for exemption under notification no.08/2005-ST and that in view of the above, the impugned order is not correct.
4. Shri Gobind Dixit, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner (Appeals).
5. We have considered the submissions from both the sides and perused the records.
6. The service tax demand is in respect of the transaction between the appellant and their principal manufacturer - M/s. Dev Arjuna Cast & Forge Pvt. Ltd., for whom the appellant had done the job work of converting rounds into handles which are a part of scaffolding. M/s. Dev Arjuna Cast & Forge Pvt. Ltd. manufacture scaffolding items for supply to M/s. L & T. A part of scaffolding item viz. Handle is got manufactured by M/s. Dev Arujuna Cast & Forge Pvt. Ltd. through the appellant out of the rounds supplied by them. It is not disputed that the appellant subjected those rounds to the process of cutting, bending, threading and finishing processes like shot blasting, heat treatment, etc. It is also not disputed that the appellant had intimated the department about availment of exemption under notification no.214/86-CE and also the principal manufacturer had given an undertaking under this exemption notification to use the job work goods in the manufacture of finished products which would be cleared on payment of duty. From these facts, it is clear that the department itself has accepted the appellants activities as manufacture. Moreover subjecting the rounds to the process of cutting, bending, threading, heat treatment, shot blasting, as a result of which, a part of scaffolding item Handle emerges, would amount to manufacture. Therefore, the activity of the appellant cannot be treated as Business Auxiliary Services (production of goods not amounting to manufacture). Moreover, even if, it is treated as service, when it is not denied that the job-work goods were returned by the appellant to the principal manufacturer, the exemption under Notification No.8/2005-ST dated 1.3.2005 cannot be denied on the ground that there is no evidence that the goods produced were used by the principal manufacturer in or in relation to the manufacture of final products. In view of this, the impugned order is not sustainable. The same is set aside. The appeal as well as stay application are allowed.
(Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) Ckp.
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