whether cutting and packing of textile material is an intermediate process or not?

[Kiran A.]

Dear Sir,

We receive textile material from the manufacturer for job work i.e. cutting and packing. We receive the packing material also from the manufacturer.

As per mega exemption Notification No.25/2012-ST dated 20.06.2012 :

"30. Carrying out an intermediate production process as job work in relation to -

1. agriculture, printing or textile processing;"

Kindly let me know whether the cutting and packing of the textile material is an an intermediate production process in relation to textile processing?

Thanks and regards,

Kiran

[Arun Kumar Singh]

The principal manufacturer will do any activity on this products then we can say that these process are intermediate process.

[Rajagopalan Ranganathan]

Sir,

As per Section Notes and Chapter Notes of Textiles of Central Excise Tariff Act, 1985, cutting and packing of textile materials does not amount to manufacture. Hence the same activity is liable to service tax. Since cutting and packing of textile materials does not amount to manufacture, the same cannot be treated as textile processing.

[Kiran A.]

Thank you very much for your reply Sir..

AI Summary

Intermediate production process: cutting and packing of textiles often not treated as textile processing and may attract service tax.
Whether cutting and packing of textile material is an intermediate production process is contested: one view treats activities done by or attributable to the principal manufacturer as intermediate processes eligible for the exemption, while the competing view-relying on tariff Section and Chapter Notes-finds cutting and packing do not amount to manufacture, cannot be treated as textile processing, and are liable to service tax when performed as job work.