2014 (2) TMI 99 - AT - Service Tax

Business Auxiliary Service - Job Work - Activity of powder coating and chrome plating for various motor vehicle parts received from the manufacture on job works basis - Held that - Appellants are undertaking the activity of powder coating and chrome plating for various motor vehicle parts and was working notification No.214/86-CE. The appellants are receiving the motor vehicle parts from principle manufacturer and after undertaking the activity of powder coating cleared to the principal manufacturer and the same goods are used in the manufacture of excisable goods cleared on payment of duty. As the processes undertaken by the appellant amounts to manufacture as per the decision relied upon by the appellant as the same is part of manufacturing process. Therefore, we find that appellants are not liable to pay service tax under the category of Business Auxiliary Service - Decided in favour of assessee.

Summary

Issues:
1. Appeal against demand of service tax under Business Auxiliary Service category for power coating and chrome plating activity.
2. Applicability of Notification No. 214/86-CE for clearance of goods at nil rate of duty.
3. Determination of whether the activity undertaken amounts to manufacture under Central Excise Act.

Analysis:
1. The appellant filed an appeal against the demand of service tax under the Business Auxiliary Service category for power coating and chrome plating activities for motor vehicle parts received on job works basis. The Revenue issued a show cause notice, confirmed the demand, and imposed penalties. The appeal was dismissed by the Commissioner (Appeals).

2. The appellant contended that they were working under Notification No. 214/86-CE and the processes undertaken by them amount to manufacture as per relevant tribunal decisions. They argued that the activities of power coating and chrome plating are part of the manufacturing process, and the goods cleared are used in the manufacture of excisable goods cleared on payment of duty.

3. The Revenue, on the other hand, argued that the activities undertaken by the appellant do not amount to manufacture as they were clearing goods under Notification No. 214/86 at nil rate of duty. However, the Tribunal found that the processes of power coating and chrome plating undertaken by the appellant constitute manufacturing activities based on relevant tribunal decisions cited by the appellant.

4. The Tribunal, after considering the arguments and relevant case laws, concluded that the appellant's activities indeed amount to manufacture within the meaning of the Central Excise Act. Therefore, the demand of service tax under the Business Auxiliary Service category was deemed not sustainable. The impugned order was set aside, and the appeal was allowed. The appellant was granted consequential relief as per the law.

5. In summary, the Tribunal ruled in favor of the appellant, stating that the activities of power coating and chrome plating for motor vehicle parts qualified as manufacturing processes under the Central Excise Act. As a result, the demand for service tax under the Business Auxiliary Service category was rejected, and the appellant was entitled to consequential relief as per the law.