9911796707
TMI Blog2024 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... fall under the term job work? - HELD THAT:- The activity undertaken by the Applicant is a job work, as the Synchronizer core belongs to their customer, throughout the entire process, as stated by them - the job worker can use his own goods for providing the services of a job worker and therefore usage of imported carbon strips by the Applicant will not alter the nature of services provided as job work services. Whether the bonding of imported carbon friction strips to Synchronizer cores received from customers would amount to composite supply of goods under CTH 6815 or 8708? - HELD THAT:- The entire activity undertaken by the Applicant is a supply of service - job work service. The Applicant has mentioned in para 19 of their submission made along with the application that there are two supplies involved in their hands namely supply of specialized carbon friction strips and supply of services falling under heading SAC 9988 - there is a gross misunderstanding by the Applicant that there are two supplies involved. There is no supply of goods separately, as mentioned by the Applicant. The Applicant has bonded the carbon strips imported by them on the Synchronizer core belonging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 103(2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of Section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s. Oerlikon Friction Systems (India) Private Limited, KI 7 K 18, SIPCOT Industrial Park, Thand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Synchronizer ring is sent back to the customer and the ownership of the imported carbon strip is transferred to the customers, when the goods are supplied back to the customer. The activity undertaken by them amounts to supply of services in terms of Sl. No. 3 of Schedule II of the CGST Act, which states that the activity of treatment or process which is applied to another person's goods is treated as a supply of services. Further, Explanatory notes under Chapter 99 for supply of services provides description of services and corresponding classification; Heading 9988 covers manufacturing services on physical inputs owned by others and further at the six digit level, their activity fits into the description given under 998873 Job work is defined under Section 2(68) of the CGST Act, 2017 and their activity is as per the definition; Further CBIC vide circular No. 38/12/2018-GST dated 26.03.2018 has clarified that job worker in addition to the goods received from the principal can also use his own goods for providing the services of job work, and hence usage of carbon strips, imported by them, on the metal component sent by the customer will not alter the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any remarks and hence it is construed that there no proceedings pending/decided on the issue related to the question raised by the applicant. 4. The Applicant, after consent, was given an opportunity to be heard in person on 02.11.2023. Shri Sunil Kumar, Consultant, who is the Authorized Representative of the Applicant appeared for the hearing and he reiterated the submissions made in their application. The Members requested the AR to submit sample copy of agreement executed by them with their customers and also a writeup about the end-use of the product sent back by the Applicant. Further to this, the Applicant vide their letter dated 09.1 1.2023 submitted technical write-up about the activity carried out by them for tier I manufacturers and also the stated that they are tier II manufacturers for M/s Tata Motors, M/s Mahindra Mahindra and M/s Toyota Motors. The Applicant vide their email dated 17.11.2023 stated that they do not have any job work agreement but have only purchase order and sales order, wherein terms and conditions are mentioned. DISCUSSION AND FINDINGS: 5.1. We have carefully considered the submissions made by the Applicant in their application, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded under Heading 9988 are performed on physical inputs owned by units other than the units providing the service. As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process. Since this Heading covers manufacturing services, the output is not owned by the unit providing this service. Therefore, the value of the services in this Heading is based on the service fee paid, not the value of the goods manufactured. Thus, we find that the subject activity undertaken by the Applicant is a supply of service falling under SAC 9988. 5.4 The next point for consideration is whether the said activity would fall under the term job work'. This term is defined under Section 2(68) of CGST Act, 2017, which states that - 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 above, it is clearly evident that the activity undertaken by the Applicant is a job work, as the Synchronizer core belongs to their customer, throughout the entire process, as stated by them. 5.5. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g SAC 9988. We find that there is a gross misunderstanding by the Applicant that there are two supplies involved. There is no supply of goods separately, as mentioned by the Applicant. The Applicant has bonded the carbon strips imported by them on the Synchronizer core belonging to their customer and the resultant product, after the job work being done, is sent back by the Applicant to their customers. The carbon strips are not sent separately under an invoice to treat that as a supply of goods. 6.2 On perusal of the copy of the invoices submitted by the Applicant, we find that the Applicant has mentioned in the item description as 'Synchronizer ring' falling under CTH 8708 and a taxable value mentioned therein. The mere look of the tax invoice gives an impression as supply of goods. However, it was explained by the Applicant that the value includes the value of the carbon strips, job charges and a profit. Also, from the submissions made by the Applicant, specifically mentioning that the question of supply of Synchronizer Core or 'Carbon friction lining bonded Synchronizer Ring' by the Applicant to the customer docs not arise, makes it clear that they are doing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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