Job work exemption

[Asked by Guest]

Dear All 

We are undertaking Job work for HAL Job work carried out to HAL are exmpted under Central Excise notification No.70/92CE. Items manufactured by HAL (Final Product) are supplied to defence are exempted from payment of Central Excise duty. Job work carried out by us are in the nature of manufacture as defined under section 2(F) of Central Excise Act.

Since the final product are cleared under NIL/ Exempted rate of Central Excise Duty, are we liable to pay service tax on job work carried out by us as per Service Tax Notification No.8/2005 ST, Kindly Clarify

 

AI Summary

Manufacture-based exemption applies: service tax not payable on job work that amounts to manufacture under law.
Job work that constitutes manufacture under the statutory definition is excluded from the Business Auxiliary Service charge, so service tax is not leviable on such job-work operations irrespective of whether the principal pays excise duty or the final product is excise-exempt; notification-based exemption is relevant only if the activity does not amount to manufacture.