Job work electroplating on goods returned to the principal manufacturer was held outside service tax liability.

Electroplating done on safety pins received on job work basis and returned to the principal manufacturer was not liable to service tax under Notification No. 8/2005-ST merely because the final product was exempt or nil-rated. The assessee maintained records under Notification No. 214/86, and any liability arising from the manufacture and final clearance of the goods lay with the principal manufacturer under the Central Excise regime. On those facts, the Tribunal treated the activity as job work outside the assessee's service tax liability and held that the demand was unsustainable.

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Issues: Whether the assessee, engaged in electroplating of safety pins received on job work basis and returned to the principal manufacturer, was liable to service tax under Notification No. 8/2005-ST on the ground that the final product was exempt or nil-rated.

Analysis: The assessee maintained records under Notification No. 214/86 and carried out electroplating on goods received and returned as a job worker. On those facts, the liability, if any, rested with the principal manufacturer at the time of final clearance under the Central Excise regime, and the assessee could not be fastened with service tax liability. The exemption under Notification No. 8/2005-ST was considered in light of the Tribunal's earlier view on electroplating and the analogous condition in Notification No. 67/95-CE concerning exempt or nil-rated final products. The Tribunal held that the assessee's activity did not attract service tax.

Conclusion: The service tax demand against the assessee was not sustainable and the appeal filed by the assessee succeeded, while the Revenue's appeal failed.

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