Service received inhouse on piece rate basis Job Work or Manpowe Supply

[Vinay Sharma]

We are manufacturers of Auto Parts. We have been receiving services of Buffing and fettling from manpower suppliers in our factory itself, means material does not move outside our factory. Buffing and fettling are regarded as job work services which are exempt under notification  no. 25/2012 as we are paying excise duty on final product. The Job worker raises bill on piece rate basis.

Since the job worker supplies manpower in our factory he had taken registration under Manpower Services and had been deposing service tax under Manpower catagory.

W.e.f. 1st July the job worker still wants to charge service tax under Manpower catagaory on the ground that manpower is effectively controlled by our supervisors. Please reply the following quries.

1- Is raising of bill under Manpower catagory ( under reverse charge) is in order ?

2- If we take CENVAT credit of such service tax, will it be in order in view of exempted status of service under notification no. 25/2012.

Regards

AI Summary

Auto Parts Manufacturer's Job Work Exempt from Service Tax per Notification No. 25/2012; CENVAT Credit Eligible A manufacturer of auto parts receives buffing and fettling services from manpower suppliers within their factory. These services are considered job work and are exempt from service tax under notification no. 25/2012, as excise duty is paid on the final product. The job worker, registered under Manpower Services, wants to charge service tax under this category, citing supervision by the manufacturer's staff. Queries include the appropriateness of billing under Manpower Services and the eligibility of CENVAT credit for such service tax. The response indicates that CENVAT credit is eligible since the intermediate process is not treated as an exempt service.