TaxTMI 
TaxTMI 
2022 (3) TMI 1105
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....n an appeal filed by the appellant, upheld the Order-in-Original except the penalty imposed under Section 76, which was set aside. Being aggrieved by the Order-in-Appeal dt. 09/01/2009, the appellant preferred the present appeal. 2. Shri Akbar Basha, learned Chartered Accountant appearing on behalf of the appellant submits that the appellant is carrying out the job work with material such as chemicals for powder coating and anodizing on aluminium supplied by their client; since the activity is with material and the appellant is paying VAT, the same is correctly classifiable as Works Contract Service (WCS). The WCS was not taxable during the relevant period i.e. 16/06/2005 to 13/03/2006; therefore the service is not taxable. He placed reliance on the following judgments:- i. CCE&Cus., Kerala Vs. Larsen & Toubro Ltd. [2015(39) STR 913 (SC)] ii. Hindustan Aeronautics Ltd. Vs. CST-I [2017-TIOL-3591-CESTAT-BANG] iii. Commissioner Vs. Daelim Industries Co. Ltd. [2004(170) ELT A181(SC)] iv. Petrofac International Ltd. Vs. CCE, Cochin [2006(3) STR 234 (Tri. Bang.)] v. CCE, Noida Vs. Falx Engineering Ltd. [2006(1) STR 208 (Tri. Del.)] 3. Sh....
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....product, hence the process under taken by the appellant, in our view it clearly falls under the category of production. The Division Bench of this Tribunal in the case of PSL Corrosion Control Services Ltd (Supra) held that even mere epoxy coating made on steel bars supplied by the client is amount to production and accordingly liable for service tax under Business Auxiliary Services. The Tribunal passed a very reasoned order in this case after analyzing various other judgments of this Tribunal and in the present case, it is not the case of appellant that the activity carried out by them is amount to manufacture in terms of Section 2(f) of Central Excise Act, 1994, therefore, the issue related to the dispute that whether the activities is processing or production on behalf of client. This issue has been dealt with by this Tribunal in the case of PSL Corrosion Control Services Ltd (Supra) wherein, the Tribunal passed following order: 9. We find that the expressions 'production' and 'manufacture' are not synonymous with each other and cannot be held to be interchangeable in the context of the present statute, though broadly speaking and from a prudent ordinary man's point of....
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....ssion i.e. "production of goods" which may not amount to manufacture, by the Legislature, in its wisdom, only throws light upon the Legislative intent that the 'production' activity which may not be covered by Section 2(f) and may not be liable to pay excise duty in terms of that Act would get covered by the definition of "Business Auxiliary Service". As such, on this point, we do not find any force in the plea of the learned Advocate. 11. It has been further argued before us that as per definition of 'Business Auxiliary Service', production of goods has to be 'on behalf of client'. The expression 'on behalf of client' necessarily implies a third party arrangement, that is the producer, the client and the person for whom the goods are purchased. In the instant case, they are producing the goods on job work on principal to principal basis and the said activity is not being undertaken by them in the capacity of agent on behalf of its principal for supply to a third party. For the above proposition, reliance stands placed upon the Board's Circular No. B2/8/2004-TRU dated 10-9-04 as also the Board's letter F.No. 127/171/2007-CX.4 dated 18-7-07. For better appreciation, we repr....
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....r quality of coating material. The coated reinforced bars shall be tested at plant site by the contractor, test results shall be jointly signed by authorized representative of contractor and the coating agency. As such, even if the appellant's plea that the expression 'on behalf of their clients' involves third party agreement is accepted, the same is satisfied in the present case. Admittedly, the contractors have to use powder epoxy coated bars in the construction of roads, bridges etc. Instead of doing the coating themselves the same is being done by the appellants on their behalf. As such, it can be safely concluded that the said service stands rendered by the appellants on behalf of L & T, H.C.C., H.P.P. etc. to the State Road Development Corporation Ltd. to whom the said main contractors are rendering service of construction. The adjudicating authority has referred to the definition of the word 'client' as appearing in the Shorter Oxford English Dictionary, 5th Edition 2002. As per the said definition, the 'client' means - 'a person using the service of any professional'. In the present case, the appellant is a company having expertise in the FBE coating and are professional i....
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....ded. The Commissioner has denied the benefit on the ground that they have not produced any detail of the same. The demand is required to be re-quantified on this count also. Similarly, the benefit of 'cum-service tax value' in terms of Explanation 2 to Section 67 of the Finance Act, 1994 also does not stand extended to the appellants, which would also affect the re-quantification of demand. In view of the above, we remand the matter to the original adjudicating authority for re-quantification of the demand by extending the above benefit to the appellants. 17. As regards the penalty, the appellants have contended that there was no intention on their part to evade payment of duty, which was not being paid on reasonable cause as they were under bona fide belief that the activity is not attracting, any duty, penalty should be set aside in terms of the provisions of Section 80 of the Finance Act 1994. Commissioner has observed that the appellants have not come forward on their own to seek clarification from the Department, which reflects upon their mala fide. However, from the peculiar facts of the case, we find that the appellant's activity of epoxy coating was admitt....
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....n behalf of client clearly falls under BAS and hence the same is liable for service tax. 6.1. The appellant's main plea is the activity of job work since with material such as chemicals will fall under the "Works Contract Service" on the ground that on the said activity the appellant has discharged the VAT. In this regard, we go through the definition of Works Contract Service which is reproduced below: Section 65(105)(zzzza) to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. - For the purposes of this sub-clause, "works contract" means a contract wherein, - (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, hea....