2024 (9) TMI 1078 - AT - Service Tax

Levy of service tax - job-work - process of chrome plating by electroplating process on gravure printing cylinders received from different manufacturers - Business Auxiliary Service or not - Eligibility for benefit of N/N. 12/2012-ST under serial no.30 (c) - HELD THAT - It is found that the appellant have carried out the job work process namely chrome plating by electroplating process on gravure printing cylinders which in turn used by principal in the manufacture of excisablegoods on which excise duty is paid. From the exemption entry, it is found that an intermediate production process as job work in relation to any goods on which appropriate duty is payable by principal manufacturer is exempted. In the present case the appellant s intermediate production process is chrome plating by electroplating process on gravure printing cylinders which directly used in relation to the manufacture of goods on which appropriate duty is payable by the principal manufacturer. Both the lower authorities have interpreted that the very goods on which the job work process is carried out should be cleared on payment of duty. It is their contention that since the cylinder on which the chrome plating was carried out itself is not cleared on the payment of duty. Therefore, the exemption is not available. As per the facts of the present case the chrome plating by electroplating process on gravure printing cylinders is a vital process which is directly related to the goods which is manufactured by the principal manufacturer on which appropriate duty is payable by the principal manufacturer. There are no reason to deny the legitimate benefit of the exemption to the appellant - the impugned order is set aside - appeal allowed.

Summary

Issues:
Interpretation of exemption under Mega Notification No.12/2012-ST for job work activity involving chrome plating by electroplating process on gravure printing cylinders.

Analysis:
The case involved a dispute regarding the liability of the appellant to pay Service Tax on job-charges collected for chrome plating by electroplating process on gravure printing cylinders. The Department contended that the job work activity fell under Business Auxiliary Service and demanded Service Tax through show cause notices. The impugned orders confirmed the demand, imposed interest and penalties under the Finance Act, 1994. The appellant, aggrieved by the order-in-original, filed appeals before the Commissioner (Appeals), which were rejected, leading to the present appeals.

The appellant argued that the job work activity was exempted under serial No.30(c) of Mega Notification No.12/2012-ST, as the chrome plated cylinders were used by principal manufacturers in relation to the manufacture of excisable goods on which duty was paid. The lower authorities denied the benefit based on the interpretation that the cylinders themselves were not cleared with duty payment. The appellant cited the Supreme Court's judgment in Novopan India Ltd. vs. Collector of C.Ex. and Customs to support their position.

The Revenue, represented by the Superintendent (AR), reiterated the findings of the impugned order. Upon careful consideration, the Tribunal found that the appellant's job work process directly contributed to the manufacture of excisable goods on which duty was paid by the principal manufacturer. The Tribunal analyzed the exemption under serial No.30(c) of the Mega Notification, emphasizing that the job work should be in relation to goods on which duty is payable by the principal manufacturer, without the requirement that the goods themselves must be cleared with duty payment. The Tribunal concluded that the chrome plating process was vital to the principal manufacturer's manufacturing process, making the appellant eligible for the exemption.

Consequently, the Tribunal set aside the impugned orders, allowing the appeals with consequential relief. The judgment was pronounced in the open court on 13.09.2024.