TMI Blog2018 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... r Business Auxiliary Services. In the present case much more processing of machining, shot blasting, drilling were carried out in addition to painting, therefore, the activity carried out by appellant are indeed falls under production - The service of production of goods on behalf of the client was very much taxable during the impugned period, therefore, it is legally liable to service tax. Appeal dismissed - decided against appellant. - Appeal No.ST/130/2009-DB - Final Order No. A / 11581 /2018 - Dated:- 30-7-2018 - HON BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) And HON BLE MR. RAJU, MEMBER (TECHNICAL) For the Appellant : Shri Gunjan Shah (C.A.) For the Respondent : Ms. Nitina Nagori (A.R.) ORDER Per : Ramesh Nair The brief facts of the case are that the appellant are engaged in processing of machining, drilling, shot blasting and painting on job work basis for the principle on the semi finished casting supplied by M/s Patel Alloys. M/s Patel Alloys after receipt of duly processed goods used same in the manufacture of wind turbine which is cleared under exemption. The case of the department is that since the appellant is engaged in production activity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue related to the dispute that whether the activities is processing or production on behalf of client. This issue has been dealt with by this Tribunal in the case of PSL Corrosion Control Services Ltd (Supra) wherein, the Tribunal passed following order: 9. We find that the expressions production and manufacture are not synonymous with each other and cannot be held to be interchangeable in the context of the present statute, though broadly speaking and from a prudent ordinary man s point of view, they may mean same. As is settled law that when an expression is defined in the statute, the same has to be understood and interpreted in the light of the language used in the definition. 10. The manufacture stands defined in terms of the provisions of Section 2(f) of the Central Excise Act. Section 65(19) of the Finance Act, 1994 defines the Business Auxiliary Service as production of goods , which does not amount to manufacture in terms of Section 2(f) of Central Excise Act. As such, it becomes clear that any production of goods, which amount to manufacture by passing strict test of Section 2(f) would not be covered by the expression production of goods . Every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducer, the client and the person for whom the goods are purchased. In the instant case, they are producing the goods on job work on principal to principal basis and the said activity is not being undertaken by them in the capacity of agent on behalf of its principal for supply to a third party. For the above proposition, reliance stands placed upon the Board s Circular No. B2/8/2004-TRU dated 10-9-04 as also the Board s letter F.No. 127/171/2007-CX.4 dated 18-7-07. For better appreciation, we reproduce the relevant contents of both the documents : Board s Circular No. B2/8/2004-TUR, dated 10-9-04 : 18.2..... Similarly, if a commercial concern produces goods on behalf of the client or provides service on behalf of a client, such activities would come under the scope of this service, unless the activity of service provider amount to manufacture in terms of the central excise law. The aim of all such activities is production of goods or provision of services, the whole or part of which is being carried out by the service provider i.e. the agent on behalf of the client . Board s letter F.No. 127/171/2007-CX.4, dated 18-7-04 : 3...... Further, the activity also d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . to the State Road Development Corporation Ltd. to whom the said main contractors are rendering service of construction. The adjudicating authority has referred to the definition of the word client as appearing in the Shorter Oxford English Dictionary, 5th Edition 2002. As per the said definition, the client means - a person using the service of any professional . In the present case, the appellant is a company having expertise in the FBE coating and are professional in the fields. Their services are being used by the main contractors in furtherance of providing their service to the State Road Development Corporation Ltd. As such, the said main contractors instead of themselves doing the job of epoxy coating are getting the same done from the appellants by utilizing their services. As such, we do not find any merits in the second limb of the argument advanced by the learned Advocate, Shri B.L. Narasimhan. 14. It further stands argued before us that inasmuch as the definition of business auxiliary service was amended with effect from June, 2005 so as to include the production of goods for the clients , and inasmuch as they are producing the goods for the main contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble cause as they were under bona fide belief that the activity is not attracting, any duty, penalty should be set aside in terms of the provisions of Section 80 of the Finance Act 1994. Commissioner has observed that the appellants have not come forward on their own to seek clarification from the Department, which reflects upon their mala fide. However, from the peculiar facts of the case, we find that the appellant s activity of epoxy coating was admittedly in the knowledge of the Revenue, inasmuch as the litigation about the said activity amounting to manufacture or not, was going on between the Department and the appellants. With the introduction of the said services in the service tax net with effect from 10-9-04, even the Revenue never advised the appellants to start paying tax on the said activity. As the Revenue was aware of the appellant s activities, it cannot be said that was any suppression, misstatement or intent on their part to evade service tax. We, accordingly, do not find any reason for imposition of penalty upon the appellants and set aside the same in terms of Section 80 of the Finance Act, 1994. 18. As a result, the appellants are held liable to pay duty, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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