TMI Blog2018 (8) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... lant that they are excluded from the definition of business auxiliary services by virtue of the proviso to the definition. The activity of the appellant of strapping the wire rod mill products of their client in the factory of the client with the material supplied by the client, so that the client can, in turn, clear the goods on payment of excise duty, is squarely covered by Notification No.8/2005-ST and therefore they are not liable to pay service tax under the head of business auxiliary services - As no service tax is leviable, the question of interest and penalties also does not arise. Appeal allowed - decided in favor of appellant. - ST/741/2009 & ST/2607/2012 - FINAL ORDER No. A/30836-30837/2018 - Dated:- 26-7-2018 - Mr. M.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/w section 64 of the Chapter V of Finance Act, 1994. It is also alleged that they have not paid the service tax and thereby contravened Rule 6 r/w section 68 of Finance Act, 1994. It is further alleged that they have contravened section 70 of the Finance Act, 1994 r/w Rule 7 as they have not filed the service tax returns. Differential service tax on these activities was demanded from them and penalty and interest are also proposed to be recovered from them. In respect of ST/741/2009, after following due process of law, the learned Commissioner confirmed the demands along with interest and imposed penalties. In respect of ST/2607/2012, the demands were confirmed by the Addl. Commissioner and the Order was upheld by the First Appellate Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. As an alternative argument, he contends that notification 8/2005-ST dated 01.03.2005 exempts taxable services of production of goods on behalf of the client from the whole of service tax where such goods are produced using the raw materials or semi finished goods supplied by the client and the goods so produced are returned back to the client for use in or in relation to manufacture of any other goods. He sought to rely on the case of M/s ITW Indian Ltd [2009 (14) STR 826 (Tri.-Bang.)] in which it was held that strapping of steel items as a part of manufacture process is not liable to service tax under cargo handling service. It is his contention that their job is identical to the job undertaken by M/s ITW India Ltd. In Para 17 of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under the man power recruitment agency services. It was further held that this activity cannot be classified under business auxiliary services as those activities amount to manufacture. 6. Learned Departmental Representative reiterated the arguments made in the Order-in-Original and Order-in-Appeal. It is his contention that the activity undertaken by the appellant does not amount to manufacture. It has been held in several judgments by the Hon ble Supreme Court that all processes do not amount manufacture although every process brings about some change in the goods. It is well settled that manufacture requires a new and distinct commodity to come into existence as known in the market. In this case, the appellant is simply strapping th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant uses these strips in the factory of the client to strap the wire rod mill products manufactured by their client. We find it hard to accept the contention of the appellant that mere strapping of those wire rod mill products brings into existence any new marketable product. This activity is part of the production process undertaken in the factory of their client but this process in itself does not amount to manufacture. The definition under section 2(f) of the Central Excise Act, 1944 is an inclusive definition which says that manufacture includes any process incidental or ancillary to the manufacture. In other words, where manufacture is taking place, all the activities which are related to and are incidental or ancillary to it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses where such goods are produced using raw materials or semi-finished goods supplied by the client and goods so produced are returned back to the said client for use in or in relation to manufacture of any other goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), on which appropriate duty of excise is payable. 8. From the above it is apparent that the activity of the appellant of strapping the wire rod mill products of their client in the factory of the client with the material supplied by the client, so that the client can, in turn, clear the goods on payment of excise duty, is squarely covered by Notification No.8/2005-S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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