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TMI Blog2019 (7) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ssory thereon and thus bringing into existence a usable sugar mill roller or new sugar mill roller which is no doubt a different commercial commodity as compared to the input involved. The product i.e. ready to use sugar mill rollar is handed over to the recipient on completion of the job. Thus even though applicant complies with the definition of job work, but having regard to the concept of job work as explained in the Flyer and the judgment of the Hon ble Supreme Court cited supra, applicant cannot be considered as a job worker within the meaning of Section 2(68) and Section 143 of the GST Act and corresponding rules - In the case at hand applicant has accepted as a matter of fact that the value of the material used/ skill and labour applied by them and the value of input supplied by the customer is almost equal. In our opinion this is a clear case of supply of goods, i. e. ready to use sugar mill roller. The activity undertaken by applicant of converting the bare shaft/beams supplied by the customer into ready to use sugar mill roller (by using one s own raw material) is supply of goods . Valuation - inclusion of the cost of shaft/beam supplied by the customer in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH ADVANCE RULING IS REOUIRED. [15.1] The Applicants are mainly engaged in the manufacture of sugar mill rollers by using their own raw material required to manufacture the sugar mill rollers. [15.2] They are supplying the said sugar mill rollers so manufactured by them on payment of GST [as per Sr.No.330 of Sch.-III to Notfn. No.1/2017-CT(R), dt. 20.06.2017], by classifying the same under HSN 8438 at the agreed price between them customers. [15.3] The said sugar mill rollers are getting worned out due to repeated use over the period of time and in that case the said worned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill shaft into ready to use sugar mill roller by applying their skill, labour and raw material. In all the above said three situations, applicants are manufacturing shells of required size by using their own raw material, then are mounting the said shell on the shafts are carrying out the further machining operations for creating groves on the said shells and are fitting the rings etc. accessories on the said sugar mill roller and are returning the same to the customer. Till June 17, the above said activity of converting the bare shaft into ready to use sugar mill roller was being treated as manufacturing of new sugar mill roller (in the light of Hon ble Supreme Court s decision in the case of Lal Woollens and Silk Mills (P) Ltd. V/s. CCE, 1999 (108) ELT-7 = 1999 (4) TMI 78 - SUPREME COURT ) and accordingly the Applicants were paying C.Ex. Duty at the appropriate rate on the said sugar mill rollers on the assessable value which was the aggregate of their agreed charges (which were decided by taking into consideration the value of their skill, labor and raw material to be used by them) and the declared cost of the shaft/beam supplied by the customer (free o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e light of Rule 27 of CGST Rules, 2017 and as per the said Rule, if the supplier is receiving any additional consideration from the customer over and above the price of the goods which he is supplying to the customer, the value of the said additional consideration is includible in the price of the said goods supplied and GST has to be paid thereon. The Hon ble Bombay High Court in the case of Tata Johnson Controls Automotive Ltd. .CCE, 2017 (7) GSTL-271 = 2017 (8) TMI 344 - BOMBAY HIGH COURT has held that the tooling s/patterns supplied free of cost by the customer and used by the supplier in the manufacture of the goods to be supplied to the said customer is treatable as additional consideration and hence is includible in the price of the said goods for payment of GST. In the light of the said decision the cost of the shaft/beam supplied by the customer free of cost and used by the Applicants in the manufacture of sugar mill roller to be supplied to the said customers is treatable as additional consideration for the purpose of Sec. 15(1) read with Rule 27 of the CGST Rules, 2017 and hence the said cost is bound to be includible in the value of the supply of sugar mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sh. V. B. Gaikwad, Advocate appeared and requested for admission of their application. Jurisdictional Officer Ms. Shobha Shinde, Inspr, Div -III, Kolhapur Commissionerate appeared, but made no written submissions. The application was admitted called for final hearing on 20.02.2019. Sh. V. B. Gaikwad, Advocate appeared, made oral written submissions. Jurisdictional Officer Sh. Manmohan Wayadande, Supdt Div-III, Kolhapur Commissionerate appeared. We heard both the parties. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is in respect of activity of conversion of bare shafts/ new shafts/forged bar and to convert them into sugar mill shafts and then into ready to use sugar mill roller by applying own skill, labor and raw material as a supply of goods or supply of services and its value of supply for the purpose of levy of GST. The issue would be on the lines thus - Applicant is a registered person under GST ACT is mainly engaged in the manufacture of sugar mill rollers by using their own raw material. In some cases sugar mill rollers are getting worned out due to repeated use over the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one s own raw material) will be treatable as supply of goods or will be treatable as supply of service? ii) Whether the cost of shaft/beam supplied by the customer is includible in the value of the said supply for the purpose of payment of GST? In order to appreciate the questions we feel it necessary to examine whether the activity proposed by the applicant would be covered under job work or not. In order to understand the term job work we reproduce the definition of job work under the GST as under: Section 2 (68): job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. From the combined reading on the definition of job work as aforesaid and the procedure of job work as prescribed u/s 143 of the CGST Act and Rule 45 of GST Rules, it is the principal who will send inputs to the job work for undertaking any treatment or process that may or may not amount to manufacture and will bring back same after the completion of job work. Thus the person who send goods to the job worker is a principal and the person who undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned the following meaning: Work done and paid for the job. The notification, it is evident, was conceived in the interest of small manufacturers undertaking job works, The idea behind the notification was to help the job workers - persons who contributed mainly their labour and skill, though done with the help of tools, gadgets or machinery, as the case may be. The notification was not intended to benefit those who contributed their own material to the articles supplied by the customer and manufactured different goods. We must hasten to add that addition or application of minor items by the job worker would not detract from the nature and character of his work. For example, a tailor entrusted with a cloth piece and asked to stitch a shirt, a pant or a suit piece may add his own thread, buttons and lining cloth Similarly, a factory may be supplied the shoe uppers, soles etc. by the customer and the factory applies its own thread or bonding material and manufactures shoes therefrom and supplies them back to the customer, charging only for its work; the nature of its work does not cease to be job work. Now, let us look at the process involved in this appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d goods utilized in the final products belongs to the job worker then the said process cannot be considered as a job work. In the case at hand applicant has accepted as a matter of fact that the value of the material used/ skill and labour applied by them and the value of input supplied by the customer is almost equal. In our opinion this is a clear case of supply of goods, i. e. ready to use sugar mill roller. Having held so we now switch over to second question raised in this application. Que 2: Whether the cost of shaft/beam supplied by the customer is includible in the value of the said supply for the purpose of payment of GST? We have already observed in the preceding para that the transaction of converting the bare shaft or beams supplied by the customer into ready to use sugar mill roller by using applicants own material would amount to manufacture and is supply of goods under the GST Act . However, applicant submits that the customers are sending old sugar mill roller, new shaft or forged bar free of cost for conversion into usable sugar mill roller and wants clarity whether the cost of said input supplied by the customer constitute value of supply for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family, (b) the term person also includes legal persons; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. In the present matter it is observed that price is not the sole consideration for the supply and hence sub-section (1) has no application in the present case but sub-section (4) is most appropriate for determination of the value of supply. As per chapter IV, value of supply is determined by applying provision of Rule 27 to Rule 31. However, we find that Rule 27 is the most appropriate and applicable rule for determination of value of supply in the present case. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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