Service Tax on Job Work

[Narendra Kumar T]

My client manufacturing and suppling materials to the Specified Research Institutions ( who is under Ministry of Defense) under Notification 10/97-CE. In this regard before manufacturing of goods, my client sending certain materials for the job work. Shall we claim Service tax exemption for Job work charges, since its a conditional exemption. As per the 25/2012 Mega Exemption Notification under Sl 30(c), carrying out an intermediate production process as job work in relation to any goods on which appropriate duty (i.e., other than Nil rate of duty or duty wholly exempt)is payable by the principal manufacturer. The goods manufactured are liable to Central Excise duty under CETA, but my client getting EDEC from the customer. My client is contending the goods are actually liable under Excise duty, but are exempted due to EDEC from the customer. If client doesn't give EDEC, then whole goods liable for the excise duty.Hence its a conditionally exempted from the Central Excise duty and can't be termed as Nil rate of duty or duty which is wholly exempted. Further, Please refer the following case laws: M/s Shoba Developers Ltd Vs Commissioner of Central Excise, LTU, Bangalore and Orissa Synthetics Ltd Vs Collector of Central Excise (1995 (77) ELT 350 (tri) = 1994 (5) TMI 124 - CEGAT, CALCUTTA Please do the needful with your valuable opinion.

AI Summary

Client Seeks Advice on Service Tax Exemption for Job Work Under Mega Exemption Notification; DSIR Registration May Influence Outcome. A client is supplying materials to a research institution under a specific excise exemption and seeks advice on claiming service tax exemption for job work charges. The exemption under the Mega Exemption Notification applies if the job work involves manufacturing or if the principal manufacturer pays excise duty. Replies advise that the exemption should be interpreted strictly and suggest that if the principal manufacturer is not paying excise duty, service tax may be applicable. Additionally, if the client is registered with DSIR and the goods are for research, they may qualify for exemption, but the nature of the job work is crucial in determining tax liability.