TaxTMI 
TaxTMI 
2021 (1) TMI 711
X X X X Extracts X X X X
X X X X Extracts X X X X
....d as aforesaid, the Department has preferred the appeal registered as ST/44/2010. 2. The assessee, M/s. Ferro Scrap Nigam Ltd, is a PSU and is engaged in handling and processing of slag mixture generated by steel companies (clients) during the manufacturing process undertaken by them. The said processing of slag scrap mixture is undertaken for the purpose of obtaining iron and steel scarp from the said mixture by way of magnetic separation and the iron and steel so obtained is handed over to the client for further use in the manufacture of dutiable goods. The assessee has entered into similar agreements with Durgapur Steel Plant (DSP), Bokaro Steel Plant and other steel plants of Steel Authority of India Limited. The scope of work that is being undertaken by the assessee is for recovery of scrap from steel skull at melting shop by lancing, breaking, cleaning and screening through magnetic separator, loading, unloading and dispatching the slag and scrap at different sites within the steel plant, handling of slag pit by breaking the slag mass mixed with scarp and feeding the metal free slag to the screening plant. Since the rates have been separately mentioned, the department has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6.06.2005, the definition of BAS under Section 65(19)(v) of the Act, inter-alia, mean any service in relation to production of goods on behalf of the client. The Principal Bench in assessee's own case, as relied by the assessee, has already observed in identical set of facts that there is no third person in the instant case, whereas the tax can be levied under BAS only in case the service is provided on behalf of the client i.e. there would be involvement of three parties. The relevant portion of the decision rendered by the Tribunal in their case is reproduced below: "4. During the relevant period the definition of BAS was as under: "(19) "business auxiliary service" means any service in relation to - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client/ or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or (v) production of goods on behalf of the client; or (vi) provision of service on behalf of the client; or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the first criteria of the definition is not satisfied. 9. As regards second criteria that the said activity has to be "on behalf of the client", we find that the matter is no longer res integra and stand settled by various decisions of the Tribunal. Even the Board's Circular has clarified the same. For ready reference we may reproduce the relevant portion : Circular No. 137/111/2007-CX, dated 15-7-2007 "03. The matter has been examined by the Board. The view of the Board is that the incineration/shredding of bio-medical where can, by no stretch of imagination, be called as "processing of goods", even if in certain cases the shredded materials may be used as filters etc. Further, the activity also does not qualify to be called as provision of service on behalf of the client. This is because the taxable activity envisaged under this category of "business auxiliary service' is that while the "client" is obliged to provide some service to a 3rd person but instead of the client providing such service, the service provider provides the such service to the 3rd person, on behalf of the client i.e. acting as an agent of the client. Admittedly, in the instant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inding and smoothening the edges, called fettling of the rough castings, received from principal manufacturers who clear the goods after carrying out further processes. Since there is no dispute that this activity of the appellants does not amount to manufacture, it can only be called processing not amounting to manufacture, which was not taxable during the period of dispute. We also agree with the appellant's plea that as held by the Tribunal in cases of M/s. Auto Coats. v. CCE, Coimbatore (supra), M/s. Gedee Weiler Pvt. Ltd. v. CCE, Coimbatore (supra) and M/s. Sonic Watches v. CCE, Vadodara (supra) during the period of dispute, the wordings of Clause (v) of Section 65(19) of the Finance Act, 1994 did not cover processing of goods of job work basis which got covered by this clause, when the same was substituted by "production or processing of goods for, or on behalf of, the clients." In view of this, the impugned order is not sustainable. The same is set aside. The appeals as well as the stay applications are allowed". 11. In view of our foregoing discussions, we hold that the appellant's activity prior to June 2005 cannot be held to be exigible to service tax under the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rocessing] of goods" means working upon raw materials or semi-finished goods so as to complete part or whole of production [or processing], subject to the condition that such production [or processing] does not amount to "manufacture" within the meaning of Clause (f) of Section 2 of the Central Excise Act, 1944 (1 of 1944). (ii) "appropriate duty of excise" shall not include "Nil' rate of duty or duty of excise wholly exempt." 10. The activities carried out by the appellant for BSP is in the nature of processing. It is evident from the record that the appellant was required to recover of iron steel scrap from various stages of manufacture and the collected scrap was to be returned to BSP, but the benefit was denied to the appellant by taking the view that such scrap cannot be covered by expression of "raw materials" or "semi-finished goods". But such a view is not called for. The scrap is nothing, but a raw material for use in melting and further manufacture within the iron and steel plant. 11. On behalf of Revenue, the Ld. DR has further raised a doubt about the satisfaction of the condition of the second limb of the notification i.e. to the effect that ....