2013 (11) TMI 550 - AT - Service Tax

Stay application - Classification of activity - Manufacturing activity or Business auxilliary service - processes on rough castings - machining, drilling, tapping and milling etc. - Exemption under Notification No. 8/2005-ST - Held that - impugned processes amounted to manufacture and consequently it cannot be classified under business auxiliary service. Therefore, this appeal is admitted without any pre-deposit. Further there shall be stay on collection of such dues during pendency of the appeal - Prima facie case in favour of assessee - Following decision of Paramount Centrispun Castings Ltd. Vs. Collector of C.Ex. Nagpur 1995 (3) TMI 205 - CEGAT, NEW DELHI , Vishal Malleable Ltd. Vs. Collector of C.Ex. Baroda 1994 (1) TMI 176 - CEGAT, NEW DELHI and Brakes India Ltd. Vs. Superintendent of C.Ex. 1997 (3) TMI 120 - SUPREME COURT OF INDIA - Stay granted.

Summary

Issues:
- Whether the processes carried out by the job worker amount to manufacture?
- Whether the job worker is eligible for exemption under Notification No. 8/2005-ST?

Analysis:
1. The case involved a job worker who performed processes like machining, drilling, tapping, and milling on rough castings received from a company, which then exported the processed goods without paying excise duty or service tax. The Revenue contended that these processes constituted Business Auxiliary Service, and a show cause notice was issued for non-payment of service tax.

2. The advocate for the job worker argued that the processes amounted to manufacture, citing relevant legal precedents to support this claim. Additionally, he presented an alternative plea for exemption under Notification No. 8/2005-ST, requesting the appeal to be admitted without pre-deposit of dues.

3. On the other hand, the Revenue's representative contended that the processed items retained their original character and were not transformed into new products, thus no manufacturing activity was involved. It was argued that if no manufacturing occurred, the activity should be classified as Business Auxiliary Service.

4. Regarding the claim for exemption under Notification 8/2005-ST, it was highlighted that the exemption applied only when goods produced using raw materials supplied by the client were returned for further manufacturing. In this case, the processed goods were exported without further manufacturing, making the exemption inapplicable.

5. The Tribunal considered the arguments from both sides and observed that the processes undertaken by the job worker indeed amounted to manufacture based on legal precedents cited by the advocate. Consequently, the Tribunal admitted the appeal without pre-deposit and granted a stay on the collection of dues during the appeal process.