Case Law Details
R.S.D. Steel Industries Vs Commissioner of CGST & Central Excise (CESTAT Chandigarh)
n a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, has set a notable precedent by exempting job-work of cutting plates/coils from service tax liability. This landmark decision came in the case of R.S.D. Steel Industries vs. Commissioner of CGST & Central Excise, Ludhiana, where the tribunal meticulously analyzed the nature of job-work services and their classification under the existing tax regime.
Analysis
R.S.D. Steel Industries, engaged in the job-work of cutting steel coils/plates into various dimensions, challenged the levy of service tax on their services. The central point of contention was whether the process undertaken by R.S.D. Steel Industries amounted to manufacturing, thereby exempting it from service tax under the categories of “Business Auxiliary Service,” “Business Support Service,” and “Renting Services.”
The tribunal leaned heavily on its previous judgment in the case of Jindal Stainless Steelway Ltd., which established that similar activities constitute manufacturing. This principle was crucial in determining that service tax was not applicable to the job-work done by R.S.D. Steel Industries, especially when such job-work resulted in goods used in further manufacturing of excisable products.
The decision also touched upon various notifications and amendments, such as Notification No. 06/2005-st, Notification No.08/2005-ST, and Notification No.33/2012-ST, highlighting the exemptions provided to small-scale service providers and activities amounting to manufacturing or production of goods. The tribunal’s interpretation of these legal provisions underscored the distinction between service provision and manufacturing activities, with the latter being outside the purview of service tax post the introduction of the Negative List on 1st July 2012.
Conclusion
The CESTAT Chandigarh’s ruling in favor of R.S.D. Steel Industries underscores a vital legal distinction between manufacturing activities and service provision. By classifying the job-work of cutting plates/coils as manufacturing, the tribunal has provided much-needed clarity on the applicability of service tax to similar job-work services. This judgment not only offers relief to R.S.D. Steel Industries but also sets a legal benchmark that could benefit numerous entities engaged in comparable manufacturing activities, thereby influencing the broader interpretation of service tax laws in India.
The ruling is a testament to the nuanced understanding of tax laws and their application to specific industry practices, ensuring that the tax liability is levied in a fair and judicious manner. Entities involved in job-work services that culminate in manufacturing can now reassess their tax obligations in light of this pivotal judgment, potentially paving the way for more such services to be exempted from service tax, aligning with the evolving tax landscape in India.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The appellants, M/s RSD Steel Industries, assails the impugned Order-in-Appeal dated 30.12.2022 passed by Commissioner (Appeals), CGST, Ludhiana.
2. Brief facts of the case are that the appellants are engaged in the job-work of cutting of steel coils/ plates in to different dimensions; the appellants having obtained registration, discharged service tax liability on the job-work done on goods which are ultimately used in the manufacture of non-excisable goods; however, they have not paid service tax on the goods which were used further in the manufacture of excisable goods; in addition to the job charges, the appellants have charged handling charges and storage charges for the coils/ plates received by them for job-work; Revenue entertained an opinion that the appellants were engaged in providing “Business Auxiliary Service”, “Business Support Service” and “Renting Services” to their customers who have sent the said plates/ coils for cutting; a show-cause notice dated 18.04.2017 was issued seeking payment of service tax of Rs.1,14,539/- for the period 2011-12 and 2012-13; the demand raised in the show-cause notice was confirmed by Order-in-Original dated 31.12.2018 along with interest and penalty; Commissioner (Appeals) vide impugned order confirmed demand of Rs.1,02,083/-after allowing cum-duty benefit in 2011-12 and denying the same in 2012-13 for the reason that the appellants did not give additional documentary evidence as undertaken during the personal hearing. Hence, the present appeal.
3. Shri Sudhir Malhotra, learned Counsel for the appellant, submits that the job-work undertaken by the appellants amounts to manufacture as held by the Tribunal in the case of Jindal Stainless Steelway Ltd. – 2016 (335) ELT 57; Notification No. 06/2005 dated 01.03.2005 as amended by Notification No.08/2008-ST dated 01.03.2008 and Notification No.33/2012 have provided exemption to small-scale providers up to a limit of Rs.10 Lakhs which was not considered by the authorities below; post Negative List i.e. with effect from 01.07.2012 Section 66D lists services by way of carrying out any process amounting to manufacture or production of goods under the Negative List; moreover, Notification No.08/2005-ST dated 01.03.2005 exempts the taxable services of production of goods on behalf of the client in relation to manufacture of any other goods on which appropriate duty of excise is payable; the activity undertaken by the appellant does not fall under any of the categories listed under “Business Auxiliary Service” and “Business Support Service”. Learned Counsel also submits that extended period was invoked without any evidence. He relies on the following cases:
- Naresh Kumar & Company Pvt. Ltd. – 2022 (67) GSTL 324 (Cal.)
- Northern Operating Systems Pvt. Ltd. – 2022 (61) GSTL 129 (SC).
- Uniworth Textiles Ltd. – 2013 (288) ELT 161 (SC).
- Cosmic Dye Chemical – 1995 (75) ELT 721 (SC).
4. Shri Yashpal Singh, learned Authorized Representative for the Department, reiterates the findings of the impugned order.
5. Heard both sides and perused the records of the case. The appellants are job-workers inasmuch as they are cutting the coils/ plates of their clients according to the specifications given to them; they are collecting job charges for the same; they are discharging service tax on the coils/ plates which are ultimately used in the manufacture of non-excisable goods by their clients; they have not discharged service tax on the goods which were ultimately used in the manufacture of excisable goods which are cleared on payment of duty by their clients. Learned Counsel for the appellants argues that the job-work undertaken by them amounts to manufacture in view of the decision of the Tribunal in the case of Jindal Stainless Steelway Ltd. (supra). I find that the Tribunal observed as follows:
“4. This very issue in the appellant’s own case had come up before this Tribunal and this Tribunal in the case of Jindal Stainless Steelway Ltd. v. Commr. of C.Ex, Raigad – 2014 (310) E.L.T. 194 (Tri.-Mum.) held that the activity of the appellant is amount to manufacture and appeal was allowed on the merit as well as on limitation. This judgment of the Tribunal was accepted by the Revenue and in another case of the appellant itself the Commissioner relying on the aforesaid Tribunal’s judgment dropped the proceeding vide O-I-O No. 11/SHH(11)PC/ RGD/2015-16, dated 24-9-2015.”
6. In view of the above, I find that as the job-work undertaken by the appellant amounts to manufacture, service tax cannot be levied on them under both Heads “Business Auxiliary Service” and “Business Support Service”. Therefore, any discussion on other issues like cum-duty price, extended period, small-scale exemption become redundant and therefore, I am not going into the other issues. Coming to the demand on handling charges and rent charged, I find that they are incidental to the job-work and it cannot be alleged that they are providing separately these services. It is not the case of the Department that the appellants are providing these services separately to different clients. Moreover, even if it is construed that the appellant is providing a bundle of services, the main service i.e. job-work of cutting plates/ coils is to be considered for levy of service tax. In view of the aforesaid reasoning, the job-work undertaken by the appellants does not attract levy of any service tax.
7. In view of the above, the appeal is allowed with consequential relief, if any as per law.
(Pronounced on 20/02/2024)
Author Bio
