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2024 (3) TMI 1174 - AT - Service TaxNature of activity undertaken by the appellant - Amounting to manufacture or not - Business Auxiliary Service or not - business of surface treatment of article/structures of steel provided to them by their clients, which is performed at site/workshop - non-payment of service tax for the period 16.06.2005 to 30.09.2009 - HELD THAT - The process undertaken by the appellant makes a new identifiable product and the same cannot be held that it is only a job work activity. In fact, the activity undertaken by the appellant amounts to manufacture as held by this Tribunal in the case of M/S. MOHATA COAL COMPANY (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BOLPUR COMMISSIONERATE 2024 (3) TMI 1166 - CESTAT KOLKATA , wherein this Tribunal has relied on the decision of the Tribunal in the case of M/S FERRO SCRAP NIGAM LIMITED VERSUS COMMR. OF CGST EXCISE, BOLPUR (VICE-VERSA) 2021 (1) TMI 711 - CESTAT KOLKATA and it was held that As it has already been decided that the said activity undertaken by the appellant amounts to manufacture and the appellant is doing the said activity on job work basis and such job worked goods have suffered duty at the end of the principal manufacturer, in these circumstances, the demand of Service Tax under the category of business auxiliary service is not sustainable against the appellant. As the issue has already been decided by this Tribunal, wherein it has been held that the activity undertaken by the appellant amounts to manufacture and the appellant is doing such activity on job work basis and such job work has suffered duty at the end of principal manufacturer. The appellant is not liable to pay service tax under the category of Business Auxiliary Service. Accordingly, the impugned demand is not sustainable against the appellant - Appeal allowed.
Issues Involved:
1. Whether the activity undertaken by the appellant amounts to manufacture. 2. Whether the appellant is liable to pay service tax under the category of Business Auxiliary Service (BAS). Summary: Issue 1: Whether the activity undertaken by the appellant amounts to manufacture. The appellant was engaged in the business of surface treatment of steel articles/structures provided by their clients. The process involved cleaning the steel surface, applying molten aluminum, primer, red oxide chromate paint, and aluminum paint. The Revenue contended that this activity falls under "Business Auxiliary Service" (BAS) and is taxable from 16.06.2005 to 30.09.2009. The appellant argued that the activity amounts to manufacture and cited the Tribunal's decision in M/s Mohata Coal Company (P) Limited, which held that similar activities amount to manufacture and the finished goods have suffered duty, thus no service tax is payable. The Tribunal found that the process undertaken by the appellant creates a new identifiable product, which amounts to manufacture. This conclusion was supported by the Tribunal's decisions in M/s Ferro Scrap Nigam Limited and other cases, which clarified that activities resulting in production or processing of goods for the client, not amounting to manufacture, were only taxable post-amendment in June 2005. Prior to this, such activities were not taxable under BAS. The Tribunal also considered the exemption under Notification No. 8/2005 for activities post-16.06.2005, concluding that the appellant's activities qualified for this exemption as the processed goods were returned to the client for further manufacture of dutiable products. Issue 2: Whether the appellant is liable to pay service tax under the category of Business Auxiliary Service (BAS). The Tribunal held that since the activity undertaken by the appellant amounts to manufacture and was performed on a job work basis, with the final goods suffering duty at the principal manufacturer's end, the demand for service tax under BAS is not sustainable. This was further supported by the Tribunal's previous rulings, which established that such activities did not fall under BAS, especially in the absence of a third party in the transaction. Conclusion: The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant. The appellant was not liable to pay service tax under the category of Business Auxiliary Service.
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