reconditioning charges

[jagadesh kumar bhojanapalli Kumar]

The over seas supplier company(X) is supplying their product(tools) to various Indian companies/Buyers (Manufacturers). The X company has made a contract agreement with Indian Company i.e., A who is a job worker to make the tool for reconditioning is charging reconditioning charges in USD (A to X).

The A Company is using their imported inputs (availing CVD) in connection with reconditioning process. How to comply under Central Excise and as well as Service Tax.

Awaiting yr response at the earliest.

Jagadesh

[KASTURI SETHI]

Reconditioning does not amount to manufacture. Therefore, it would attract Service Tax. A Company will have to pay Service Tax on reconditioning charges. A will pay ST after availing small Scale exemption limit of ₹ 10 lakhs under Notification No.33/2012-ST dated 20.6.2012.

AI Summary

Reconditioning services liable to service tax; job worker must pay tax after applicable small scale exemption.
Reconditioning of tools by an Indian job worker is not manufacture and is treated as a taxable service; the job worker must pay Service Tax on reconditioning charges after availing the applicable small scale exemption, and should treat receipts as service income even where imported inputs subject to CVD are used.