Dilemma! VAT OR WCT OR SERVICE TAX OR EXCISE???

[LAXMIKANT ARORA]

Your client is engaged in the manufacture of ready made garments falling under Chapter 61 of first schedule of Central Excise Tariff Act, 1985.  According to Section 2 (d) of Central Excise Act, 1944 excisable goods means goods specified in the first schedule and second schedule to Central Excise Tariff Act, 1985 as being subject to duty of excise.  Therefore the process undertaken by your client amounts to manufacture and is liable to excise duty.

Section 66 D of Finance Act, 1994 (Negative list) process that results in 'manufacture' of goods is not 'service' and hence the same is not liable to service tax.

Since your client manufactures excisable goods on job work basis, he can avail the exemption granted by Notification No. 214/86-CE dated 25.3.86 as amended subject to the conditions specified therein.

In my opinion your client need not pay service tax. But please ensure the raw material supplier of you client pays duty on the finished goods returned by your client.

I am extremely confused whether fabricating of clothes is a works contract or a manufacturing process

[DR.MARIAPPAN GOVINDARAJAN]

Your query is not clear.

[BrahmaputraCrackerandPolymerLimited AGovt.OfIndiaEnterprise]

Main query is as follows:-

1. Whether the amount of consideration under the agreements with Foreign Licensors , which related to the licensing of "know-how" the agreement will not come under the purview of from the service tax which is to be borne by a indian Company ( Such Licenses /know how is not registered in India-IPR Goods ) ?( Position before 1.7.2012 and post 1.7.2012)
2. Whether refund can be claimed in case wrong deposit of service tax ? Whether interest is to be allowed by Tax Deptt as well as in case of wrong deposit of service tax , period of limitation of 1 year is not applied ?

AI Summary

Manufacture vs service tax: processes producing excisable garments are treated as manufacture and not service tax liable. Processes converting fabric into ready-made garments under Chapter 61 constitute manufacture and yield excisable goods, exempting such activity from service tax under the Finance Act negative list; job-work production can rely on the notified exemption subject to conditions, and the raw-material supplier's duty on returned finished goods must be ensured.