Commissioner Of Central Excise vs Paramhari Engineers

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No.ST/159/10

(Arising out of Order-in-Appeal No.SR/30/NGP/2010 dated 20/01/2010 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical)

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? ========================================

Commissioner of Central Excise, Appellant Nagpur Vs. Paramhari Engineers Respondent

Appearance:

Shri.D.Nagvenkar, Addl. Comm. (AR) for appellant None for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical)

Date of Hearing : 06/02/2015 Date of Decision : 06/02/2015

ORDER NO

Per: M.V. Ravindran

1. This appeal is filed by the Revenue against Order-in-Appeal No.SR/30/NGP/2010 dated 20/01/2010 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur.

2. The relevant facts are that the appellant are engaged in the job of conversion of black bars into bright bars for M/s.Sunflag Iron & Steel Company Ltd., Warthi and M/s.NHK Springs India Ltd., Malanpur under regular agreement with them for which received processing charges from them. The appellant was doing work of straightening, peeling, centreless grinding of steel (carbon, ally, spring, free cutting and stainless steel) thereby converting black bars into bright bars. The Honble Supreme Court in the case of M/s.Vee Kayan Industries Vs CCE Chandigarh [1996 {83-ELT-262-SC]} held that the conversion of black bars into bright bars does not amount to manufacture. However as per Chapter Note 4 to Chapter 72 of Central Excise Tariff Act, 1985, the above process has been recognized as amounting to manufacture in terms of Central Excise Tariff Act, 1985 w.e.f. 01/03/2005, which implies that prior to 01/03/2005 the above process was not amounting to manufacture. On verification of the records of the appellant for the period 10/09/2004 to 28/02/2005 it was noticed that they have recovered processing charges of Rs.31,30,543/- from M/s.Sunflag Iron and Steel Company Ltd., Warthi and M/s.NHK Spring India Ltd., Malanpur, however, they have not paid service tax, on processing charges recovered from the above parties for job work under the category Business Auxiliary Service. As per clause (v) of Section 65 of the Finance Act, 1994, the activity of production of goods on behalf of the client not amounting to manufacture would attract service tax. It appeared that the above act of the appellant has resulted in non payment of service tax amounting to Rs.3,19,315/-. Therefore, the lower authority issued a show-cause notice to the appellant and adjudicated in the aforesaid manner. Aggrieved by the order, the assessee preferred an appeal before the first appellate authority. The first appellate authority after following due process of law, set aside the order-in-original and allowed the appeal.

3. None appeared on behalf of the respondent.

4. After perusing the records with the help of learned DR, we find that the appeal could be disposed of at this stage without any representation from the assessee.

5. Learned DR after taking us through the order-in-appeal, submits that the first appellate authority had erred in setting aside the order-in-original. It is his submission that services rendered by the assessee would fall under the category of Business Auxiliary Services as they are processing goods on behalf of their clients. He would submit the reliance placed by the learned Commissioner (Appeals), on a Board Circular No.24/24/94-CX dated 21/02/1994 is incorrect. He would submit that the respondent herein has manufactured the goods during the period when they were held to be as not amounting to manufacture.

6. On careful consideration of the submissions made by the learned DR and perusal of the records, we find nothing wrong in the order passed by the first appellate authority for more than one reasons;

i) Firstly, the first appellate authority has recorded clearly besides, appellants are also converting black bars into bright bars by availing Cenvat Credit on the inputs and clearing finished goods on payment of Central Excise Duty. When the process is accepted as a process of manufacture, it is not correct or logical to conclude that the same process when carried on job work basis does not amount to manufacturing. This submission of the assessee before the first appellate authority has been accepted, as there are no contrary findings and the Revenues ground of appeal are also not contradicting the said submissions made by the assessee. In the absence of any counter to submissions that the activity undertaken by the appellant/assessee amounts to manufacture and they have discharged the Central Excise duty, the same process if it is undertaken on job work, cannot be held as not manufacturing process.

ii) Secondly, we find that the first appellate authority has rightly relied upon the benefit of Notification No.202/88-CE dated20/05/1988 which clearly indicates the exemption to certain final products made from the specific products. It is settled law that an exemption from Central Excise duty can be granted only to manufacturer of products. The benefit of Notification No.202/88-CE is in respect of items manufactured in job work process by the assessee, in this case, it has correctly been held as manufactured products by the first appellate authority.

7. In our considered view the findings recorded by the first appellate authority are correct and the Revenues appeal has no merits. The impugned order is upheld as correct and legal.

8. Appeal is rejected.

(Pronounced in Court)

(P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial)

pj

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