AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 1338
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....n the business of manufacturing of gearboxes and its components falling under Chapter 87. 2.1. During the underlying period, the Appellant was also working as a job worker of Tata Motors Limited ('TML'). The Appellant was erstwhile Transmission Division of TML. Further, with effect from 01.04.2000, the gear box Division was incorporated as a subsidiary to TML and the erstwhile Axle Division of TML was taken over by H.V. Axles Limited ('HVAL') and was incorporated as a subsidiary to TML. Thus, the Appellant took over the gear box manufacturing division from TML while HVAL took over the axle division of TML. As a result, both the companies have become subsidiaries of TML. Vide an order dated 29.07.2011 passed by the Bombay High Court the scheme of merger of M/s H.V. Transmission Ltd. and M/s H.V. Axles Ltd. was approved to form the new entity M/s TML Drivelines Ltd. (Appellant herein). 2.2. During the underlying period, the Appellant was engaged in carrying out heat treatment activity on its own parts and also for other parts of HVAL for further manufacture of Axles and parts thereof which were cleared on payment of duty to TML. Further, both Appellant and HVAL were working as ....
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....#39; as defined under section 2(f) of the Central Excise Act, 1944.. 3.1. Further, it is the submission of the Appellant that Note 6 of Section XVII of the First Schedule to the Central Excise Tariff Act, 1985 states that conversion of an incomplete or unfinished product into a complete/finished product shall amount to manufacture. Thus, the instant case of the Appellant stands squarely covered under such provisions wherein the materials received from HVAL being in incomplete and unfinished condition are converted into complete and finished products after undergoing heat treatment. 3.2. In support of their contention, the appellant submitted that this Tribunal in the Appellant's own case in M/s TML Drivelines Limited v. Commissioner of Central Excise, Jamshedpur [Final Order No. 76697/2024 dated 05.08.2024 in Appeal No. ST/426/2011] pertaining to the period 10.09.2004 to 28.02.2005 and concerning the same issue, held that the activity of heat treatment amounts to manufacture. The appellant also placed their reliance on the decision of the Tribunal, Chennai in the case of M/s Excel Industries v. Commissioner of GST and Central Excise, Tiruchirapalli, 2024 (5) TMI 1341- CESTAT ....
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....t, so there is no reason to deny the said benefit of exemption to the Appellant. 3.6. The appellant submits that the axles manufactured by HVAL are excisable goods and the job work charges paid by HVAL to the Appellant are included in the assessable value of the axles on which excise duty was paid by HVAL. Thus, job work charges on which service tax has been demanded by the Ld. Commissioner have already been subjected to excise duty. Therefore, the present demand of service tax on the same job work charges results in duplication of demand being both service tax as well as excise duty. Hence, the present demand of service tax is not sustainable in law. Thus, the appellant submits that no service tax can be levied on the job work charges paid by HVAL to the Appellant as the same has been included in the assessable value of the goods of HVAL, on which excise duty has already been paid. Hence, the impugned order is liable to be set aside on this ground alone. 3.7. The appellant also submits that the demand is liable to be set aside on the ground of revenue neutrality inasmuch as any service tax charged on the Appellant would be available as credit to HVAL. In this regard, the App....
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....dertaking the process of heat treatment on raw materials provided by HVAL and thereafter the Appellant is sending it back to HVAL which is being used by them for the manufacture of axles and parts thereof and the resultant products are cleared to TML upon payment of excise duty. Thus, we observe that the issues to be decided in the appeal are: (i) Whether the activity of heat treatment undertaken by the appellant amounts to manufacture or not? (ii) Whether the demand is sustainable on the ground of it being revenue neutral? 6.1. In this regard, we observe that the issue with respect to process of heat treatment amounting to manufacture or not, is no longer res integra as the said issue stands decided by this Tribunal as well as various other forums in favour of the assessees. We also find that this Tribunal in the Appellant's own case in M/s TML Drivelines Limited v. Commissioner of Central Excise, Jamshedpur [Final Order No. 76697/2024 dated 05.08.2024 in Appeal No. ST/426/2011] pertaining to the period 10.09.2004 to 28.02.2005 and concerning the same issue held that the activity of heat treatment amounts to manufacture. The relevant paragraph of the said deci....
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.... TMI 1341- CESTAT CHENNAI, wherein the Tribunal has held that the said activity of heat treatment amounts to manufacture. Relevant extract of the said decision is extracted hereunder: "7. It can be seen that the definition excludes any activity that amounts to manufacture of excisable goods. In the present case, the supply of raw materials as well as clearing of worked goods are undertaken by the appellant by giving declaration as per Notification No. 214/86-CE. Thus the onus to pay excise duty is on the principal manufacturer. The Tribunal in the case of Pioneer Engineering Industries (supra) had considered the very same issue and held that the activity undertaken by the assessee in the nature of cutting, punching, drilling, heat treatment on steel plates so as to send the products to M/s. BHEL would amount to manufacture. The Tribunal had relied upon the decision of the Hon'ble Supreme Court in the case of Orissa Bridge & Construction Corpn. Ltd. Vs. Commissioner of Central Excise, Bhubaneswar, [2011 (264) ELT 14 (SC)] to hold that such activity amounts to manufacture. Following the decision of the Tribunal in the case of Pioneer Engineering Industries (supra), we are of....
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.... therefore we do not find any infirmity in the impugned order and the same is upheld." 6.4. In view of the above discussions and by relying on the ratio of the decisions cited supra, we hold that no service tax can be levied on the job work charges paid by HVAL to the Appellant as the same has been included in the assessable value of the goods of HVAL, on which excise duty has already been paid. 6.5. We also find that the heat-treated components are used by HVAL in the manufacture of Axles and parts thereof which are ultimately cleared to TML on payment of duty by HVAL. We observe that the said activity of the Appellant has been expressly exempted in terms of Notification No. 8/2005-ST dated 01.03.2005, as amended by Notification No. 19/2005-ST dated 07.06.2005. The said notification exempts the taxable service of production or processing of goods for or on behalf of the client referred in sub-clause (v) of clause (19) of section 65 of the Finance Act, from the whole of service tax leviable thereon under section 66 of the Finance Act. Thus, we observe that the appellant has been undertaking the process of heat treatment on raw materials provided by HVAL and thereafter the App....