2023 (5) TMI 606 - AT - Service Tax

Exemption from service tax - Job work - printing of PVC film/ sheets - Manufacturing activity vs Processing of goods -Business Auxiliary Service or printing activity - printing of PVC film/ sheets amounts to manufacture under Section 2 (f) of Central Excise Act, 1944 - applicability of N/N. 14/2004-ST - Extended period of limitation - HELD THAT - The N/N. 14/2004-ST exempts production of goods on behalf of client and any service incidental or ancillary to production of goods. In the instant case, it is not in dispute that the appellants are printing on PVC material supplied by their clients. Printing may or may not amount to manufacture, but it cannot be denied the activity of printing is an activity of production. In these circumstances benefit of Notification No. 14/2004-ST, as amended cannot be denied to the appellant. It is notice that the impugned order holds that the activity of printing does not amount to manufacture and therefore, the appellants are not entitled to benefit of Notification No. 14/2004-ST. It is to be seen that the activity of production of goods is different from the activity of manufacture. The notification not only covers the activity of production of goods but also any activity incidental or ancillary to production of goods. In this circumstances the activity of printing on PVC done by the appellant can be considered to be activity of production of goods. The appeal is allowed.

Summary

Issues:
The issues involved in this case are the demand of Service Tax and imposition of penalties on M/s. Decorative Sleeves Pvt Ltd. for job work involving printing on PVC films.

Service Tax Demand:
The appellant, a manufacturer registered under Central Excise, undertook job work involving printing on PVC films for three different parties. The revenue sought to tax the job work charges under Business Auxiliary Service. The appellant argued that the process amounts to manufacture as per a Tribunal judgment and is exempt from Service Tax under Notification 14/2004-ST. The appellant maintained that all transactions were recorded in their books of account. The Tribunal found that the activity of printing on PVC material qualifies as production of goods on behalf of the client, entitling the appellant to the benefit of the exemption under the said Notification.

Interpretation of Notification No. 14/2004-ST:
Notification No. 14/2004-ST exempts taxable service provided by a commercial concern in relation to Business Auxiliary Service, specifically covering production of goods on behalf of the client and any service incidental to production. The Tribunal noted that while printing may not always amount to manufacture, it is considered an activity of production. The impugned order incorrectly held that printing does not amount to manufacture, thereby denying the appellant the benefit of the exemption. The Tribunal clarified that the activity of printing on PVC material by the appellant can be construed as production of goods, making them eligible for the exemption under the Notification.

In conclusion, the Appellate Tribunal CESTAT AHMEDABAD ruled in favor of M/s. Decorative Sleeves Pvt Ltd., setting aside the impugned order and allowing the appeal due to the activity of printing on PVC material being considered as production of goods.