TaxTMI 
TaxTMI 
2021 (1) TMI 648
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....n No.11/2017-CGST; that in the said notification, point (i)(d)contains that the rate of job work where the process does not amount to any manufacture will attract rate of SGST and CGST of 6% each. The extract of Notification No.11/2017-CGST Rate and Notification No.20/2019-CGST rate are re-produced hereunder: Sr.No. Chapter, Section or Heading Description of Service Rate (percent) Condition 26. Heading 9988(Manufacturing services on physical inputs (goods) owned by others) (i) Services by way of job work in relation to- (a) Printing of newspapers; (b) Textile yarns (other than of man-made fibres) and textile fabrics; (c) Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (d) Printing of books (including Braille books), journals and periodicals; (e) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975). Explanation.- "man made fibres" means staple fibres and filaments of organic polymers produced by m....
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.... Central Excise Tariff Act, 1985 (CETA), as amounting to manufacture (deemed manufacture) OR (iii) Which in relation to the goods specified in the 3rd Schedule of CETA involves packing or repacking of such goods in a unit container or labelling or relabelling of containers including declaration or alteration or alteration of retail sale price on it or adoption of any other treatment on the goods to tender the product marketable to the consumer. 4. The applicant has quoted various judgements/circular which gives the definition of manufacture as under: (a) In a landmark case of UOI vs. Delhi Cloth and General Mills Co.ltd., (1977 (1) E.L.T.(J199) (S.C.), it was held that manufacture is 'bringing into existence of a new substance known to market' and that merely applying the process to a substance would not amount to manufacture if there is nothing new and marketable created. The definition was further refined in later decisions to clarify that excisable goods are required to be capable of being bought and sold and even if there is a tariff entry provided under Central Excise Tariff Act, 1985, it would first need to pass the test of manufacture. The second test of....
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....), but may also be used to build up thickness on undersized parts or to form objects by electroforming; that other electroplating processes may use a non-consumable anode such as lead or carbon and in these techniques, ions of the metal to be plated must be periodically replenished in the bath as they are drawn out of the solution; that the most common form of electroplating is used for creating coins, such as US pennies, which are made of zinc covered in a layer of copper; that in Layman's language, we can say that the electroplating will put a coating on a part, hence this process will not result in any product with distinct name or character nor does it change the characteristics of the product and hence does not amount to manufacture. 6. The applicant has further submitted that with respect to the Circular No.126/45/2019 issued on 22.11.2019, clarification has been given by CBIC with respect to GST rate on SAC code of job work and as per the circular, they understand that where there is job work done as per section 2(68) of CGST Act, where the process is done by the assessee of the material provided by other registered persons, the GST rate applicable will be 12% and where p....
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....tification No.11/2017-Central Tax(Rate) dated 28.06.2017. As per their submission, the applicant receives the goods(materials) from the party and does process on the materials received and then returns the same goods to the concerned party with their coating on the parts and in such process neither a new product is generated nor is the product with new distinct name being generated i.e. it only enhances the durability of the material to some extent. 10. To begin with, we need to find out the correct classification of services of Electroplating surface coating/electroless nickel plating rendered by the applicant as well as the liabilility of GST on the said services and also to confirm whether the services provided by the applicant are indeed covered under Heading 9988 as stated by them, for which we will be required to refer to Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 which covers the chapter, section and sub-heading of services under GST. We have gone through the said notification and find that Entry No.26 of the said notification pertains to Heading No.9988 (Manufacturing services on physical inputs (goods) owned by others) and contains services supplied/prov....
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....e shall, so far as may be, apply to the interpretation of heading 9988. (iv)----- 10.1 From the above, it can be seen that as per para(iii) above, the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall apply to the interpretation of heading 9988. Further, it is also seen that the "Manufacturing services on physical inputs (goods) owned by others, other than (i) above" falls at entry of item(ii) and the GST liability on the same is 18% (9% SGST + 9% CGST). We find that the aforementioned Notification has been amended vide Notification No.20/2017-Central Tax(Rate) dated 22.08.2017 wherein the major amendment is the shifting of 'Manufacturing services on physical inputs (goods) owned by others' from item(ii) to item(iii). The amendments made vide above notification in respect of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 is detailed hereunder: "(vi) against serial number 26,- (a) in column (3), in item (i),- (A) for sub-item (b), the following sub-item shall be substituted, namely:- "(b) T....
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....-- (v) in item (ii), after sub-item (b), the following sub-item shall be inserted, namely: "(c) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5 per cent. or Nil."; (vi) after item (ii), in columns (3), (4) and (5)in column (3) and the entries relating thereto, the following shall be inserted, namely: - (3) (4) (5) "(iia) Services by way of any treatment or process on goods belonging to another person, in relation to printing of all goods falling under Chapter 48 or Chapter 49 which attract CGST @ 6per cent. 6 --- (vii) in item (iii), for the word, brackets and figures "and (ii)" the figures, brackets, letters and word ", (ia), (ii) and (iia)" shall be substituted;" 10.3 Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 has been further amended vide Notification No. 46/2017-Central Tax(Rate) dated 14.11.2017, wherein the following amendments have been made in respect of Entry No.26 of the said Notification: "(iii)against serial number 26, in column (3), in item (i), after sub-item (h), the following shall be inserted, namely: - '(i) manufacture of handicraft goods. ....
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....", the brackets, words and figures "(ib), (ic), (id)," shall be inserted; 10.6 Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(after amendments by all the aforementioned notifications) reads as under( as on date): Sr.No. Chapter, Section or Heading Description of Service Rate (percent) Condition 26. Heading 9988 (Manufacturing services on physical inputs (goods) owned by others) (i) Services by way of job work in relation to- (a) Printing of newspapers; (b) Textiles and textile products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);" (c) all products other than diamonds, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);"; (d) Printing of books (including Braille books), journals and periodicals; (da) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5per cent. or Nil; (e) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975). (ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the Firs....
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....on, we find that the applicant has not taken into consideration all the aforementioned amendments while filing the application. The applicant has shown the entry in respect of "Manufacturing services on physical inputs(goods) owned by others, other than (i) above" at item(ii)(please refer para 6.1 above), which is as per the Original Notification No.11/2017-Central Tax(Rate) dated 28.06.2017), whereas after all the aforementioned amendments to the said Notification, the said entry appears at item(iv) of Entry No.26 of the said Notification. Further, we also find that the entry item (id)referred to by the applicant has been inserted vide Notification No.20/2019-Central Tax(Rate) dated 30.09.2019 only. Therefore, in view of the above, the question of the applicant seeking advance ruling, should correctly read as under: " Whether the service supplied by the applicant would fall under (id) or (iv) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended and what would be the rate of GST applicable?" 12. Next, we are required to find out what Electroplating surface coating and Electroless nickel plating means. Since the definition of these term....
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....bove entries (i) to (iv) of the Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (amended till date) as mentioned in para 10.6 and find that none of the entries from item (i) to (iii) except item (id) (applicable from 01.10.2019 onwards) and item (iv) would be applicable to the applicant. Since the applicant has referred to both entries of item(id) as well as item(iv) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended) we will discuss both of them simultaneously. On going through the above entries, we find that: (1) Entry at item(id) refers to "Services by way of job work other than (i), (ia), (ib) and (ic) above whereas (2) Entry at item(iv) refers to "Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia),(ib), (ic), (id), (ii), (iia) and (iii) above. 12.3 We also find that the applicant has time and again stated in his submission that the services provided by them does not amount to manufacture as it does not result in the emergence of a commodity having different name, character and use. The applicant have also quoted a few judgements and a circular to support their contention a....
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....ore, feel that the services provided by the applicant would be more appropriately classified under the item (iv) rather than (id). Here we will be required to refer to Rule 3 of the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) which reads as under: "3. When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. ((b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified a....
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....than (i), (ia), (ib) and (ic) above; 6 --- (iv) Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above. 9 --- The Circular has referred to the definition of Job work as defined in Section 2(68) of the CGST Act and has stated that there is a clear demarcation between scope of the entries at item (id) and item (iv) under heading 9988 of Notification No.11/2017-Central Tax (Rate) dated 28-06-2017; that Entry at item (id) covers only job work services as defined in section 2 (68) of CGST Act, 2017, that is, services by way of treatment or processing undertaken by a person on goods belonging to another registered person and on the other hand, the entry at item (iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act. 13.1 Therefore, in view of the clarification given by the Board vide Circular No.126/45/2019 issued on 22.11.2019 as well as in light of the discussions made in the earlier paras, we conclude that th....