2018 (10) TMI 651 - AT - Service Tax

Management maintenance or repair service - appellants contended that they basically provided job work to Indian Oil Corporation within their factory premises and therefore they were not covered under the scope of management, maintenance or repair service - Held that - The appellants were given the task of operating one of the plants of Indian Oil Corporation for producing crumb rubber modified bitumen. Non availment of Notification No.214/86-CE - Held that - It is to state that notification permits removal of goods without payment of duty from the premises of the job worker when the premises of the job worker is away from the premises of the main manufacturer. In the present case because the job work was done within the factory of IOC, the question of availment of the Notification No.214/86-CE simply does not arise. It is incorrect to hold that a job worker necessarily has to avail of the exemption Notification No.214/86-CE. Further, as the process done by the appellants amounted to manufacture, the job work done by them did not fall in the category of service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax demand on management, maintenance, or repair service provided to Indian Oil Corporation without payment of tax.

Analysis:
The appeal was filed against an Order-in-Original confirming a service tax demand of ?50,12,301/- on the grounds that the appellants provided management maintenance or repair service to Indian Oil Corporation without paying service tax. The appellants argued that they were tasked with operating and maintaining Indian Oil Corporation's plant to produce Crumb rubber modified bitumen, essentially providing job work within the factory premises and not falling under the category of management, maintenance, or repair service.

The Adjudicating authority noted that the appellants did not avail themselves of Notification No.214/1986-CE meant for job workers, leading to the contention that they were not providing job work. However, upon consideration, it was found that the appellants were operating one of Indian Oil Corporation's plants for manufacturing crumb rubber modified bitumen, a process acknowledged as manufacturing by the learned A.R. The non-availment of Notification No.214/86-CE was deemed irrelevant since the job work was conducted within the factory premises of Indian Oil Corporation, eliminating the necessity to avail of the said notification. Furthermore, as the process undertaken by the appellants amounted to manufacturing, the job work did not fall under the category of service.

The Tribunal referred to previous decisions to support the finding, citing the cases of M/s Jubilant Industries Ltd. Vs Commissioner of Central Excise, Ghaziabad and M/s CMS (I) Operations & Maintenance Co. P. Ltd. Vs Commissioner of Central Excise, Pondicherry. These cases established that when activities involve manufacturing using the principal's plant and machinery or maintenance and operation of a power plant on a contract basis, no service tax liability arises. In alignment with these decisions, the Tribunal found no merit in the revenue's position, setting aside the impugned order and allowing the appeal with consequential relief.