Job work of Conversion of Milk to Skimmed Milk Powder

[RAJESH SINHA]

Dear Experts!

Our unit is a Dairy Unit and have facility of Conversion of Milk to Skimmed Milk Powder. During conversion, Cream is also separate from Milk. Many Dairy Units are contacting us for such conversion. Here, I want to clear the matter about imposing of Service Tax on such jab work. As the Product 'Skimmed Milk Powder' is falling in negative list of Excise, and being our unit is a factory, does such type of job work exempt from service tax?

Kindly clear it.

-------- Rajesh Kr. Sinha (Mob No.-9835229100 / 9128891361 / 7463883911)

AI Summary

Conversion of Milk to Skimmed Milk Powder Not Subject to Service Tax; Falls Under 'Nil' Excise Duty Category. A dairy unit inquires about the applicability of service tax on converting milk to skimmed milk powder, as this product is on the negative list for excise. An expert clarifies that this conversion is considered manufacturing under the Central Excise Act, 1944, and falls under the excise tariff sub-heading 0402 21 00, which attracts a 'Nil' rate of duty. Hence, the conversion process on a job work basis is not liable for service tax. Another expert concurs, confirming that the process results in a new product, thus meeting the definition of manufacture, with excise duty being NIL.