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TMI Blog2021 (1) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... cid gold on underlying copper- or nickel-plated circuits reduces contact resistance as well as surface hardness. Copper-plated areas of mild steel act as a mask if case hardening of such areas are not desired. Tin-plated steel is chromium-plated to prevent dulling of the surface due to oxidation of tin. The inside of a steel food can is electroplated with tin, a less reactive metal than iron which provides a physical barrier to oxygen and water, stopping the can from rusting. Compared to the electroplating process, a major advantage of electroless nickel plating is that it creates an even coating of a desired thickness and volume, even in parts with complex shape, recesses, and blind holes. Because of this property, it may often be the only option. Another major advantage of electroless nickel plating is that it does not require electrical power, electrical apparatuses, or sophisticated jigs and racks. Electroless nickel plating can have a matte, semi-bright, or bright finish. The manufacturing services is not akin to manufacture but are services which are related to the process of manufacture or assist in the process of manufacture of goods. It also appears that the process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess Nickel Plating services. The applicant has stated that their firm receives the goods(materials) from the party and does process on the materials received and then returns the same goods to the concerned party with their coating on the parts and in such process neither a new product is generated nor is the product with new distinct name being generated i.e. it only enhances the durability of the material to some extent. 2. The applicant has stated that as on 30.09.2019, CBIC has issued notification No.20/2019-CGST which has amended the rate of GST for the job work prescribed in Notification No.11/2017-CGST; that in the said notification, point (i)(d)contains that the rate of job work where the process does not amount to any manufacture will attract rate of SGST and CGST of 6% each. The extract of Notification No.11/2017-CGST Rate and Notification No.20/2019-CGST rate are re-produced hereunder: Sr.No. Chapter, Section or Heading Description of Service Rate (percent) Condition 26. Heading 9988(Manufacturing services on physical inputs (goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) above. 9 --- 3. The applicant has submitted that there is confusion whether their service will fall under (id) or Sr.No.(ii) of the list as per the above notification; that as per the process and no manufacturing activity done by them, it is their humble belief that the services provided by their firm will fall under (id) by way of job work other than (i) (ia) (ib) (ic) above and the reason for that is as follows: (a) Point(ii) covers manufacturing services on physical inputs(goods) owned by others, other than (i) above. The definition of manufacturing services is not defined in CGST Act, however, the word manufacture has passed through various jurisprudence pronouncements and various tests in erstwhile law and as per Section 2(f) of the Central Excise Act, 1944, manufacture includes any process: (i) Incidental or ancillary to the completion of manufactured product And (ii) Which is specified in relation to any goods in the section or chapter notes of the 1st Schedule to the Central Excise Tariff Act, 1985 (CETA), as amounting to manufacture (deemed manufacture) OR (iii) Which in relation to the goods s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant has stated that the definition of job work as per Section 2(68) of the CGST Act is any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. The applicant has submitted that the definition of Electroplating Service is not provided in GST Act but as per Wikipedia Electroplating is a process that uses an electric current for metal coating, but no electric current is used by them to reduce dissolved metal captions so that they form a thin coherent metal coating on a job; that the term is also used for electrical oxidation of anions on to a solid substrate, as in the formation of silver chloride on silver wire to make silver/silver-chloride electrodes; that electroplating is primarily used to change silver wire to make silver/silver-chloride electrodes; that electroplating is primarily used to change the surface properties of an object (such as abrasion and wear resistance, corrosion protection, lubricity, aesthetic qualities), but may also be used to build up thickness on undersized parts or to form objects by electroforming; that other electroplating processes may use a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended and what would be the rate of GST applicable? DISCUSSION FINDINGS: 7. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative Shri Akshat Vithlani, C.A. at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 8. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to similar provisions of the GGST Act. 9. Based on the submission of the applicant as well as the arguments/discussions made by the representative of the applicant during the course of personal hearing, we find that the main issue to be decided is whether the services of Electroplating surface coating and Electroless nickel plating provided by the applicant are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process [for example, poly(vinyl alcohol) prepared by the hydrolysis of poly(vinyl acetate)]; or (b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates. 2.5 --- (ii) Manufacturing services on physical inputs (goods) owned by others, other than (i) above. 9 --- Further, para-4 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 reads as under: 4.Explanation.- For the purposes of this notification,- (i) Goods includes capital goods. (ii) Reference to Chapter , Section or Heading , wherever they occur, unless the context otherwise re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.11/2017-Central Tax(Rate) dated 28.06.2017 has been further amended vide Notification No.31/2017-Central Tax(Rate) dated 13.10.2017 wherein the following amendments have been made in respect of Entry No.26 of the said Notification: (h) against serial number 26,in column (3), - (i) in item (i), for sub-item (c), the following sub-item shall be substituted, namely: - (c) all products falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (ii) in item (i),after sub-item (d), the following sub-item shall be inserted, namely: - (da) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5per cent. or Nil; (iii) in item (i), after sub-item (e), the following sub-items shall be inserted, namely: - (f) all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said Chapter; (h) manufacture of clay bricks falling under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shifting of manufacturing service on physical inputs(goods) owned by others , from item(iii) to item (iv). The amendments made in respect of Entry No.26 of the said Notification is as under: (j) against serial number 26, in column (3),- (A) in item (i), after sub-item (e), the following sub-item shall be inserted, namely: - (ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) respectively; ; (B) for item (iii) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely: - (3) (4) (5) (iii) Tailoring services. 2.5% --- (iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ii), (iia) and (iii) above. 9% --- 10.5 Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 has been further amended vide Notification No. 20/2019-Central Tax(Rate) dated 30.09.2019 (effective from 01.10.2019), where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule to the Customs Tariff Act, 1975 (51of 1975) respectively; ; (f) all food and food products falling under Chapters 1 to 22 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said Chapter; (h) manufacture of clay bricks falling under tariff item 69010010 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (i) manufacture of handicraft goods. Explanation . - The expression handicraft goods shall have the same meaning as assigned to it in the notification No. 32/2017 -Central Tax, dated the 15th September, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i),vide number G.S.R. 1158 (E), dated the 15th September, 2017 as amended from time to time. 2.5 --- (ia)Services by way of job work in relation to- (a) manufacture of umbrella; (b) printing of all goods falling under Chapter 48 or 49, which attr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, in view of the above, the question of the applicant seeking advance ruling, should correctly read as under: Whether the service supplied by the applicant would fall under (id) or (iv) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended and what would be the rate of GST applicable? 12. Next, we are required to find out what Electroplating surface coating and Electroless nickel plating means. Since the definition of these terms are not available in the CGST Act, 2017, we will be required to refer to the definition of these terms as per dictionary. As per Dictionary.com: (a) Electroplating surface coating is the process of coating the surface of a conducting material with a metal. During the process, the surface to be covered acts as a cathode in an electrolytic cell, and the metal that is to cover it acts as an anode. (b) Electroless nickel plating is a process that co-deposits a nickel-phosphorous alloy without need for an externally applied electrical current. 12.1 On going through the above definitions, it appears that the aforementioned processes results in the formation of a coating on the materials/metals on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing services on physical inputs (goods) owned by others, other than (i), (ia),(ib), (ic), (id), (ii), (iia) and (iii) above. 12.3 We also find that the applicant has time and again stated in his submission that the services provided by them does not amount to manufacture as it does not result in the emergence of a commodity having different name, character and use. The applicant have also quoted a few judgements and a circular to support their contention and have stated that the services provided by them are job work only and does not amount to manufacture and would therefore be covered under item(id) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended) and not under item(iv) of the said entry. Here, we would like to mention that there is no denying the fact that the procedure followed by the applicant is that of job work only and that there is a general entry available at item(id) of Entry No.26 of above said notification with effect from 01.10.2019. We also fully agree with the view of the applicant that the service provided by the applicant does not amount to manufacture, but the word mentioned in item(iv) of aforementioned entry is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. ((b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as the criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 12.4 On going through the above, we feel that entry at item(iv) of Sr.No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended) provides the most specific description to the services provided by the applicant as compared to the general description provided at item(id) of the said entry. We therefore conclude that the services of electroplating surface coating and electroless nickel pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act, 2017, that is, services by way of treatment or processing undertaken by a person on goods belonging to another registered person and on the other hand, the entry at item (iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act. 13.1 Therefore, in view of the clarification given by the Board vide Circular No.126/45/2019 issued on 22.11.2019 as well as in light of the discussions made in the earlier paras, we conclude that the services of Electroplating surface coating and Electroless nickel plating provided by the applicant are classifiable under Heading 9988 (Manufacturing services on physical inputs(goods) owned by others) which appears at item(iv) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended). The GST liability on the above would be 18% (9% SGST + 9% CGST) upto 21.11.2019. However, in view of clarification issued by the Board vide Circular No.126/45/2019 dated 22.11.2019, the GST liability for the applicant for the period from 22.11.2019 onwards wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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