TMI Blog2021 (10) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... d rollers signify working on same goods which are already in existence. The already existing goods (old and worn out rollers) are worked on so that the defects get removed and the same are ready for reuse. There is no new product emerging. The supply of service in the subject case is nothing but repair done on some old and used product to make it reusable. The impugned rollers were already a finished product which have been used for a period of time and suffered damages which are being rectified by the applicant. On receipt of the worn out roller, the shell which is made of cast iron is broken into pieces. The shaft is left untouched. The broken pieces of cast-iron are melted after addition of nominal material to compensate for the worn out and lost part of the shell, etc. This material is recast and shrunk on the shaft. This process involves heating of the shell and inserting the shaft vertically. On coiling the shell the casting grips the shaft. Thereafter the shell is machined and grooved. Then this Sugar Mill Roller is delivered to the customer - the identity of the impugned goods remains the same before and after performing the process. An example would be of a Television S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lers Pvt. Ltd., the applicant, are as under:- 2.1 The activity of reshelling of old sugar mill rollers is held as repairing activity by the Hon'ble Supreme Court in the case of Lathia Industrial Supplies Co. Pvt.Ltd., 1993(29) ELT-751 and the Hon ble Tribunal in the cases of Jagat Machinery Manufacturers P.Ltd., 2013 (32) STR-663 Zenith Roilers Ltd. V/s. CCE, 2014(33) STR-678 under Central Excise era. 2.2 On the said activity, applicant has paid service tax as repair/maintenance service/Business Auxiliary Service as per the Finance Act, 1994 under Service Tax regime. 2.3 Under GST regime also the said activity is classified as a Service and applicant is charging 18% GST on the same since all services are attracting 18% GST. 2.4 However, after insertion of clause (id) in Sr. No.26 of Notification No. 11/2017-CT(R), dt.28.06.2017 declaring 6% CGST for services by way of job work, some of applicant's customers expressed a view that the said activity is treatable as job work service covered under said newly inserted clause (id) of Sr. No.26 of Notification No. 11/2017-CT(R), dt.28.06.2017, since the customers are following the procedure under Rule 55 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d activity of reshelling of old sugar mill rollers during the C.Ex.regime. However, after levy of service tax on the repairing activity, they have regularly paid appropriate service tax on the aggregate of their labour charges and cost of the material used by them in the course of said activity of reshelling of old sugar milli rollers. 2.6.4. However, the Hon'ble High Court in the case of Saraswati Industrial Syndicate Ltd, (cited supra) at para (8) had opined that, if bare shaft received from the customer is converted into sugar mill roller, the activity might amount to manufacture of new goods and the C.Ex.Duty might be payable on such sugar mill rollers manufactured by using the bare shafts received from the customer. Hence, under C.Ex. regime, the Applicants were treating the activity of conversion of bare shaft/new shafts/forged bars into sugar mill rollers as manufacturing activity and were clearing the said sugar mill rollers by classifying under CH.Heading 8438 on payment of appropriate C.Ex. Duty on the assessable value (arrived at by aggregating their labour charges and cost of material used by them in the said activity and the value of the bare shaft/new shaft/for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of old sugar mill rollers. 2.6.11 However, after insertion of clause (id) in Sr.No.26 of Notification No.11/2017 CT(R), dt.28.06.2017 declaring 12% GST for services by way of job work, some of their customers has expressed a view that their activity of reshelling of old sugar mill rollers is treatable as job work service covered under said newly inserted clause (id) of Sr. No.26 of Notification No. 11/2017-CT(R), dt.28.06.2017 and will attract 12% GST since the said customers are following the procedure under Rule 55 read with Rule 45 of CGST Rules, 2017 while sending the old sugar mill rollers to them for reshelling and are declaring the same in their ITC-04 job work return to be filed under Rule 45 of the CGST Rules, 2017, Hence, the Applicants have filed the present ARA application before the Hon'ble Advance Ruling Authority to obtain the ruling on the questions as to whether - i) the above said activity of reshelling of old sugar mill rollers is treatable as a job work service falling under SAC 9988 or is treatable as a repair/maintenance service falling under SAC 9987? and ii) The said activity of reshelling of old sugar mill rollers will attract 12% GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FFICER: OFFICER SUBMISSION DATED 12.08.2021:- 3.1 Question: - The activity of reshelling of old sugar mill rollers whether is treated as a job work service under SAC 9988 or is treatable as a repair/maintenance service under SAC 9987? Comments: Maharashtra Authority for Advance Ruling vide their order No. GST-ARA 97/2018-19/B-24, Mumbai dated 02.03.2019, has observed that the activity proposed by the assessee i.e., resheliing of old sugar mill rollers treated as a job work service under SAC 9988 or is treatable as a repair/maintenance service under SAC 9987 is incorrect and the said activity is clear case of supply of goods. For which the court has elaborated the meaning of Job Work under Section 2(68) and Section 143 of the GST Act and corresponding rules. The real spirit of job work as explained by the court is that where the principal sends minor input to the job worker and all other inputs and goods utilized in the final products belongs to the job worker then the said process cannot be considered as a job work. In the case at hand applicant has accepted as a matter of fact that the value of the material used/skill and labour applied by them and the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant and jurisdictional officer at the time of preliminary as well as the final hearings. 5.2 The questions raised by the applicant are as under:- 1. The activity of reshelling of old sugar mill rollers whether is treatable as a job work service under SAC 9988 or is treatable as a repair/maintenance service under SAC 9987? 2. Whether the said activity of reshelling of old sugar mill rollers will attract 12% GST in terms of clause (id) of Sr. No.26 of Notification No.11/2017-CT(R), dt.28.06.2017 or will continue to attract 18% GST as earlier ? 5.3 The applicant has submitted that it manufactures sugar mill rollers and supplies the same to various customers. Further, it receives old sugar mill rollers (worned out due to wear and tear) from their customers and make them reusable by reshelling process. Sometimes the applicant also receives bare shafts (taken out of the old sugar mill rollers) or new shafts/forged bars from their customers and converts the same into ready to use sugar mill rollers. 5.4 During the course of the final hearing the applicant submitted that the present application is only with respect to receipt of old sugar mill rollers (worn out due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned rollers signify working on same goods which are already in existence. The already existing goods (old and worn out rollers) are worked on so that the defects get removed and the same are ready for reuse. There is no new product emerging. The supply of service in the subject case is nothing but repair done on some old and used product to make it reusable. The impugned rollers were already a finished product which have been used for a period of time and suffered damages which are being rectified by the applicant. 5.9 The applicant, during the course of the online hearing has submitted that they receive old, used and worn out Sugar Mill Rollers for the purpose of reshelling. The applicant has also submitted that it treats the process of reshelling as a repair or reconditioning of the Sugar Mill Rollers. The process enumerated by the applicant is that 'the Sugar Mill Roller consists of two parts, i.e. 'shaft' and 'shell'. On receipt of the worn out roller, the shell which is made of cast iron is broken into pieces. The shaft is left untouched. The broken pieces of cast-iron are melted after addition of nominal material to compensate for the worn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject case there is no processing of raw material nor is there an emergence of a new product. What comes in is sugar mill roller and what goes out is the same thing. Further, Job work is just a process undertaken by a job worker on goods belonging to a principal and may or may not amount to manufacture. Further, a job worker may or may not use some portion of his material. Job work has been defined under section 2(68) of the CGST Act, 2017 to mean 'any treatment or process undertaken by a person on goods belonging to another registered person and the expression jobworker shall be construed accordingly'. 5.11.4 In the subject case the impugned goods are received by the applicant from sugar mills. These sugar mills had already purchased sugar mill rollers as a finished product, used the same in the sugar factories and wear and tear on the said rollers make them unusable. The said rollers are brought to the applicant for making the same usable again. The sugar mills cannot be termed as principal in the subject case as referred to, in the definition of the term Jobwork'. The above example of a Television set being made workable after some process carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under SAC 9987. Since the said activity of reshelling of old sugar mill rollers is neither manufacturing nor job work, it will continue to attract 18% GST and not 12% GST in terms of clause (id) of Sr. No.26 of Notification No.11/2017-CT(R), dt.28.06.2017. 5.12.1 The departmental officer has submitted that the Maharashtra Authority for Advance Ruling vide their order No.GST-ARA 97/2018-19/B-24, Mumbai dated 02.03.2019 have already decided the issue. The departmental officer has also submitted that the activity proposed by the assessee i.e., reshelling of old sugar mill rollers treated as a job work service under SAC 9988 or is treatable as a repair/maintenance service under SAC 9987 is incorrect and the said activity is clear case of supply of goods as decided by authority vide referred order dated 02.03.2019. 5.12.2 In this connection it may be mentioned that in the case earlier decided by this authority in respect of the applicant, the issue was whether the activity of converting the bare shaft/beams supplied by the customer into ready to use sugar mill roller (by using one's own raw material) will be treatable as supply of goods or will be treatable as supply of servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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