Commissioner Of Central Excise, Nagpur vs M/S. Yogesh Fabricators
- CitationAppeal No. ST/652/2010-Mum in ST/CO-02/2012-Mum.
Ratio decidendi
The rule this decision rests on
Where a respondent undertakes a job for a lump-sum consideration, performing the work within the principal's factory premises on goods still on the principal's production line, and the tenor of the agreement and purchase orders shows execution of a lump-sum work rather than the supply of manpower, the activity does not constitute Manpower Recruitment and Supply Agency Services, whether directly or indirectly or temporarily, and no service tax is leviable under that category. A licence issued to the respondent identifying the other party as a principal employer does not alter the character of the services where the records show a lump-sum contract for carrying out a job on the principal's premises; the classification turns on the substance of the contract as a whole rather than on that licence. Where the activity is part of the manufacturing process of the principal, and the principal has factored the cost of that activity into its cost of production on which excise duty has been paid, levying service tax on the same activity amounts to double taxation and cannot be sustained.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Arising out of Order-in-Appeal No. SR/271/NGP/2010 dt. 25.08.2010 passed by the Commissioner of Customs & Central Excise (Appeals) Nagpur )
For approval and signature:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S.Pruthi, Member (Technical)
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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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Commissioner of Central Excise, Nagpur : Appellant
VS
M/s. Yogesh Fabricators : Respondent
Appearance
Shri B.Kumar Iyer, Superintendent (A.R.) for Appellant
Shri P.V. Sadavarte, Advocate (A.R) for respondent
CORAM:
Mr. M.V. Ravindran, Member (Judicial) Mr. P.S.Pruthi, Member (Technical)
Date of hearing : 23/04/2015 Date of decision : 23/04/2015
ORDER NO.
Per : M.V. Ravindran
This appeal is directed against the Order-in-Appeal No. SR/271/NGP/2010 dt. 25.08.2010.
2. Revenue is aggrieved by the said order on the ground that the adjudicating authorities Order-in-Original confirming the demand has been set aside by the first appellate authority holding that the services rendered by the respondent does not fall under the category of Manpower Supply Recruitment Agency Services.
3. The respondent has filed a Cross-objection against the appeal filed by the Revenue. Both the appeal and the Cross-objection are disposed of by a common order.
4. Heard both sides and perused the records.
5. On perusal of the records, we find that the adjudicating authority has confirmed the demand of service tax under the category of Manpower Recruitment and Supply Agency Services holding that the respondent assessee has supplied manpower to one M/s. Amitasha Enterprises Pvt. Ltd., whereas it is a case of the respondent-assessee that they have undertaken a job, consideration for which is paid on the basis of lump sum amount. First appellate authority after considering the facts of the case has come to a conclusion, relying on the judgemnet of the Tribunal in the case of Ritesh Enterprises Vs. Commissioner of C. Ex., Bangalore 2010 (18) STR 17 (Tri.Bang.) that no taxable services are provided.. We reproduce the said findings of the first appellate authority.
Further, in the instant case, it is on record that M/s. Amitasha Enterprises Pvt. Ltd. supplies the galvanized material to the Appellant. Appellants then pick up the material from the production line and render certain jobs such as cutting, punching, drilling, bending, notching etc. Once the activity of Appellants is over, M/s. Amitasha Enterprises Pvt. Ltd. enter the production in its Daily Stock Register (RG-1) and clear the goods on payment of appropriate rate of duty. The entire job is carried out within the factory premises before RG-1 stage. Thus the activity undertaken by the Appellants is with respect to the goods which are still on the production line of M/s. Amitasha Enterprises Pvt. Ltd. In view of the scope of the Notification No. 8/2005-ST dated 1.03.2005, I hold that, the demand of Service Tax from the Appellant with respect to the aforesaid activity done by the appellant by the lower authority is not sustainable.
The Appellant has also relied heavily on the Honble Tribunal in the case of M/s. Ritesh Enterprises Vs. CCE, Bangalore as reported in 2010 (18) STR 17 (Tri.-Bang.), wherein in similar circumstances, the Honble Tribunal set aside the demand of service tax. I agree with the aforesaid submission. The relevant extract of the said decision is furnished below:
..the contracts given to the appellants are for execution of the work of loading, unloading, bagging, stalking destalking etc. and there is not a slightest whisper of supply manpower. The tenor of agreement between the parties has to be understood and interpreted in its entirety. Since, in the instant case, the entire tenor of the agreement and the purchase orders issued by the service recipients clearly indicates execution of a lump-sum work, the services provided by the appellants would not constitute supply of manpower directly or indirectly, temporarily or otherwise.
In the present case, the activity carried out by the Appellants is part and parcel of the manufacturing activity of Transmission Line Tower, M/s. Amitasha Enterprises Pvt. Ltd. have also admittedly factored in the above expenses incurred towards the activities of the appellants, in their cost of production on which appropriate duty was paid at the time of its clearances from their factory. As pleaded by the appellants, under such circumstances, demanding service tax again on the amount on which Central Excise duty is being paid by M/s. Amitasha Enterprises Pvt. Ltd. is nothing but double taxation. In view of the above legal position, I hold that the above case law is squarely applicable in the instance case and therefore the impugned Order-in-Original is liable to be quashed.
As against the above factual matrix and the judicial pronouncement, in the instant case of the respondent assessee, we find that the grounds of appeal basically relies upon the license issued to the respondent-assesee by the office of the Licensing Officer, Government of Maharashtra, holding that Amitasha Enterprises Pvt. Ltd. is a principal employer. In our considered view, this may not change complexion of the services in any way as the entire records clearly indicate that the respondentassessee was given a lumpsum contract of carrying out the job in the factory premises of Amitasha Enterprises. This activity will not be covered under the category of Manpower Supply Recruitment Services. This view is expressed by the Bench in the case of Seven Hills Construction Vs. Commr. of Service 2013 (31) STR 611 (Tri.-Mumbai)
6. In view of the factual matrix and the authoritative to judicial pronouncement, we find that the appeal filed by the Revenue is devoid of merits and accordingly reject the appeal. Cross-objection is also disposed of in above terms.
(Dictated in court)
(P.S.Pruthi) Member (Technical)
(M.V. Ravindran) Member (Judicial)
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