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Hema Engineering Industries Ltd V/S Commissioner of S.T., New Delhi

Company & Directors' Information:- HEMA ENGINEERING INDUSTRIES LTD [Active] CIN = U74210DL1987PLC029299

Company & Directors' Information:- D P ENGINEERING INDUSTRIES LIMITED [Active] CIN = U27310DL2008PLC176856

Company & Directors' Information:- A K ENGINEERING INDUSTRIES (INDIA) PRIVATE LIMITED [Active] CIN = U25206DL1997PTC085204

Company & Directors' Information:- G L ENGINEERING INDUSTRIES PRIVATE LIMITED [Active] CIN = U28920MH1981PTC023662

Company & Directors' Information:- NEW INDIA INDUSTRIES LIMITED [Under Process of Striking Off] CIN = U99999GJ1980PLC000467

Company & Directors' Information:- B V M ENGINEERING INDUSTRIES LIMITED [Active] CIN = U28111DL1972PLC005983

Company & Directors' Information:- R R R ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74899DL1993PTC055069

Company & Directors' Information:- A. V. ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U99999DL1974PTC007360

Company & Directors' Information:- G D R ENGINEERING INDUSTRIES PVT LTD [Strike Off] CIN = U27109UP1971PTC003388

Company & Directors' Information:- L S ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74899DL1977PTC008484

Company & Directors' Information:- I B I ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U45202PB1974PTC003422

Company & Directors' Information:- A H B ENGINEERING INDUSTRIES PVT LTD [Strike Off] CIN = U35999WB1988PTC044786

Company & Directors' Information:- O K ENGINEERING INDUSTRIES PRIVATE LTD [Active] CIN = U74899DL1987PTC027660

Company & Directors' Information:- HEMA INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15316TG2012PTC080550

Company & Directors' Information:- R P ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U99999DL1973PTC006781

Company & Directors' Information:- S V ENGINEERING INDUSTRIES PVT LTD [Under Liquidation] CIN = U74210TG1981PTC003174

Company & Directors' Information:- NEW INDIA INDUSTRIES LIMITED [Liquidated] CIN = U99999MH1941PTC003247

Company & Directors' Information:- THE NEW INDIA INDUSTRIES LIMITED [Not available for efiling] CIN = U99999MH1942PLC007691

Company & Directors' Information:- NEW INDUSTRIES CORPORATION LIMITED [Dissolved] CIN = U99999MH1945PTC004625

    Final Order No. ST/A/53178/2017-CU(DB) in Appeal No. ST/2210/2012-ST(DB)

    Decided On, 09 May 2017

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi

    By, MEMBER

    For Petitioner: Sanjeev Malhotra, CA And For Respondents: Sanjay Jain, DR

Judgment Text

1. This appeal is directed against the impugned order dated 30-4-2012 passed by the Commissioner (Adjudication), Service Tax, New Delhi. Brief facts of the case are that the appellant is engaged in undertaking the process of electroplating/painting on the semi-finished goods received from M/s. Hero Motocorp Ltd. The appellant avails Cenvat credit of service tax paid on the input services used for providing the output services. Taxable service used for production of goods on behalf of the client is exempted from payment of service tax in terms of Notification No. 8/2005-S.T., dated 1-3-2005. Since for undertaking the job work activities, the appellant claimed the benefit of the said notification, and did not pay service tax on the taxable services provided to M/s. Hero Motocorp Ltd.; the Department considered the activity of job work as exempted service in terms of Rule 2(e) of the Cenvat Credit Rules, 2004. Since the appellant has utilized Cenvat credit of more than 20% of the tax payable in terms of Rule 6 ibid, the Department initiated proceedings against the appellant for confirmation of the demand towards wrongly utilized Cenvat credit. In the process of adjudication, the original authority vide the impugned order dated 3-4-2012 has confirmed demand of Rs. 50,74,588/- along with interest. Besides, penalties were also imposed under Rule 15 ibid and Section 76 of the Finance Act, 1994.

2. Heard both sides and perused the case records.

3. The short question involved in this appeal for consideration by the Tribunal is, as to whether, exemption provided for job work activities under Notification No. 8/2005, dated 1-3-2005 should be considered as exempted service in terms of Rule 2(e) ibid for applicability of the embargo created in Rule 6 ibid.

4. The term "exempted service" has been defined in Rule 2(e) ibid to mean taxable services which are exempt from the whole of the service tax leviable thereon, and include services on which no service tax is leviable under Section 66 of the Finance Act, 1994. The services in this case were exempted from payment of service tax under Notification No. 8/2005-S.T., dated 1-3-2005 on the condition that the goods produced by the job worker of using raw material or some semi-finished goods should be returned back to the client for use in or in relation to manufacture of any other goods, on which appropriate excise duty is payable. On fulfillment of such conditions, the appellant was extended the benefit of non-payment of service tax. Such exemption though conditional, is availed by the appellant. Hence, the mischief of Rule 6(3) of the Cenvat Credit Rules, 2004 will get attracted.

5. The appellant pleaded that the Tribunal in the case of Polycab Industries : 2010 (19) S.T.R. 585 (Tri.-Ahmd.) held that job workers availing exemption under Notification No. 214/86-C.E. is eligible for credit on input services. We note that in the present case, the issue involved is not an exemption under Central Excise Notification No. 214/86-C.E. provides exemption to job worker, when the final product is duly accounted for the duty payment by the principal manufacturer. The said Notification is held to be not a bar for availing Cenvat credit by the job worker. The product manufactured/processed by the job worker ultimately suffers Central Excise duty at the hands of the principal manufacturer. The ratio of the earlier decisions of the Tribunal in the cases of Sterlite Industries (I) Ltd. v. CCE, Pune : 2005 (183) E.L.T. 353 (Tri.-LB) and JBF Industries v. CCE & ST, Vapi : 2014 (34) S.T.R. 345 (Tri.-Ahmd.) are on this basis. However, in the present case, Notification No. 8/2005-S.T. provides for exemption from Service Tax, when the process undertaken does not amounts to manufacture. There is no further follow up of service tax li

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ability at the hands of principal manufacturer. Accordingly, we hold that the ratio adopted for Notification No. 214/86-C.E. in respect of Central Excise duty exemption cannot be applied to Notification No. 8/2005-S.T. to determine the applicability of the Cenvat Credit Rules, 2004. In view of above, we do not find any infirmity in the impugned order. Accordingly, we dismiss the appeal filed by the appellant.