2024 (5) TMI 1341 - AT - Service Tax

Tribunal Confirms Job Work Activities as Manufacturing, Exempt from Service Tax, Overturns Previous Order, Grants Relief.

M/s. Excel Industries Versus Commissioner of GST and Central Excise, Tiruchirapalli

M/s. Excel Industries Versus Commissioner of GST and Central Excise, Tiruchirapalli - TMI Issues:Whether the appellant is liable to pay service tax on labour charges for job work activities involving bending, cutting, shearing, and punching on goods fabricated for a power plant.Analysis:The appellant, engaged in manufacturing boiler parts, argued that their activities amount to manufacturing excisable goods and are covered under Notification No. 214/86-CE, exempting them from service tax liability. The appellant contended that the labour charges received should not attract service tax due to the nature of the work undertaken.The Tribunal considered a similar case in Pioneer Engineering Industries and held that activities like cutting, punching, and drilling of plates constitute manufacturing. The appellant's argument was supported by the Commissioner (Appeals) in a separate case post-2012, where it was observed that the activities carried out by the appellant indeed amount to manufacturing.The Department argued that service tax is applicable regardless of whether the activity amounts to manufacturing. They pointed out that the appellant had not paid excise duty on the goods cleared, making them ineligible for exemption under Notification No. 8/2005-ST.After reviewing the evidence, including photographs of the goods worked on, the Tribunal concluded that the appellant's activities did amount to manufacturing. The Tribunal emphasized that the definition of Business Auxiliary Services excludes activities that amount to manufacturing excisable goods. It was noted that the appellant's supply of raw materials and clearance of worked goods were done under Notification No. 214/86-CE, placing the onus of excise duty on the principal manufacturer.Citing the decision in Pioneer Engineering Industries and the Supreme Court case of Orissa Bridge & Construction Corpn. Ltd., the Tribunal held that the appellant's activities constituted manufacturing. As the Commissioner (Appeals) for a subsequent period had already set aside the demand for service tax, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential reliefs as per law.