2018 (4) TMI 1234 - AT - Service Tax

Business Auxiliary services - Job-Work - process of electroplating - N/N. 8/2005-ST, dated 01.03.2005 - Held that - it is clear that the appellant-assessee is a job worker, undertaking the electroplating work on the goods which were returned to the principal manufacturer, who in terms of the said notification is liable to discharge Central Excise Duty, if any payable on the same at the time of final clearance - the appellant-assessee cannot be brought under service tax liability - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order of Commissioner (Appeals) Madurai
- Liability of the appellant-assessee for service tax on electroplating job work
- Remand direction by the Commissioner (Appeals) and powers of remand

Analysis:
1. The appellant-assessee was engaged in electroplating safety pins on a job work basis for their principal manufacturer who had availed a small-scale exemption. The Revenue contended that the appellant was liable for service tax on the electroplating process under Notification No.8/2005-ST. The impugned order confirmed the Revenue's view and remanded the matter for re-quantification of tax liability, leading to grievances from both parties.

2. Upon review, it was observed that the appellant-assessee complied with procedures under Notification No. 214/86 and maintained proper records for the electroplating work. The Tribunal referred to a previous case where it was held that job workers like the appellant-assessee were not liable to pay service tax on such processes. Additionally, a related case highlighted the condition that the final product should be exempt or 'nil' rated, similar to the situation at hand. Consequently, it was determined that the appellant-assessee could not be held accountable for service tax liability.

3. The Tribunal found merit in the appeal of the appellant-assessee, setting aside the impugned order and allowing their appeal. On the other hand, the appeal filed by the Revenue was dismissed. The decision was based on the analysis of relevant notifications, past judgments, and the specific job work arrangement between the appellant and their principal manufacturer. The Tribunal's ruling effectively disposed of the case, providing clarity on the service tax liability in the context of electroplating job work.