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TMI Blog2024 (12) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants are engaged in processing of goods of M/s. Varroc Engineering Pvt. Ltd. on job work basis and the said conversion charges are used for doing the said activity. In fact, the movement of the inputs was also shown as job work and job work challans were raised in terms of Rule 4(6) of Cenvat Credit Rules, 2004. The appellant failed to convey the actual process undertaken by them with respect to the inputs received from M/s. Varroc Engineering Pvt. Ltd. Hence, it could not be ascertained as to whether the said process amount to manufacture or not. Irrespective the single process carried out by the appellant cannot be termed as amounting to manufacture. Therefore, the appellant was held to have been doing job work not amounting to manufacture and the activity of the appellant has been alleged to be the act of providing Business Auxiliary Services to M/s. Varroc Engineering Pvt Ltd. Since the activity being taxable, the amount received for performing the said activity as conversion charges from M/s. Varroc Engineering Pvt. Ltd. are liable to service tax. With these observations and allegations, Show Cause Notice No.222/15 dated 20.10.2015 was served upon the appellants proposing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the entire intimation of the nature of job work was in the notice of the department. In fact, the Superintendent, Range Service Tax, Rampur, vide his letter dated 24.04.2024 had opined that the activity/process undertaken by the party amounts to manufacture and accordingly, the party is not liable to pay any service tax under the category of Business Auxiliary Services. The Preventive Officers of the concerned division also vide their report dated 26.06.2014 had endorsed the said view of the superintendent. The entire procedure along with the drawings and the samples was provided to the department even at the time of investigation i.e. prior issuance of the show cause notice. But still the show cause notice has been issued on 20.10.2015 without alleging any act of the appellant which may amount to suppression of facts. In absence thereof, the allegations of suppression are not sustainable. Order is liable to be set aside for the reason of show cause notice being barred by time. Appeal is accordingly prayed to be allowed. 4. While rebutting these submissions, learned Departmental Representative has mentioned that the appellant had failed to provide any concrete evidence of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt not amounts to the manufacture and as such for pre negative list period, it amount to Business Auxiliary Serve and for post negative list period it fails to fall under Section 66D of Finance Act. To adjudicate the correctness of these findings, the moot question to be decided is: "Whether the activity undertaken by the appellant on the raw material received from M/s. Varroc Engineering Pvt Ltd. amounts to manufacture or not?" 5.2 Foremost, we need to know the meaning of 'manufacture'. The Section 2(f) of Central Excise Act, 1944 define manufacture. The definition for the relevant period was as follows: "manufacture" includes any process- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter Notes of 1[the Fourth Schedule] as amounting to manufacture ;or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity." After so stating, the Court posed the question: does the processing of original commodity brings into existence a commercially different and distinct article? In that context, the three-Judge Bench analysed the ratio in previous decisions and stated thus:- "Some of the cases where it was held by this Court that a different commercial article held come into existence Include Anwarkhan Mahboob Co. v. State of Bombay-AIR 1961 SC 213 (where raw tobacco was manufactured into bidi patti), A. Hajee Abdul Shakoor and Co. v. State of Madras-AIR 1964 SC 1729 (raw hides and skins constituted a different commodity from dressed hides and skins with different physical properties), State of Madras v. Swastik Tobacco Factory- AIR 1966 SC 1000 (raw tobacco manufactured into chewing tobacco) and Ganesh Trading Co., Karnal v. State of Haryana- (1974) 3 SCC 620, (paddy dehusked into rice). On the other side, cases where this Court has held that although the original commodity has undergone a degree of processing it has not lost its original ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute manufacture." 5.5 Reverting to the facts of the case, we observe that the department has produced a detailed literature about the processes undertaken by them on the raw material received from the principal manufacturer to explain that the 'Forged Blastings' received from the principal manufacturer are being converted into 'Gear 4th Platina'. The photographs of 'Forged Blasting' and the 'Gear 4th Blatina' are also placed on record. In fact, both the physical goods were also produced before the bench as sample. A five step process has been explained where the first step is drilling at the centre of the said 'Forged Blast'. Second is carrying out CNC machining on one side of the 'Blasting', the raw material received from M/s. Varroc Engineering Pvt. Ltd. The third one is carrying out same CNC machining on the other side of the 'Blasting'. The next is carrying out of deburring with the help of nidlle files and lastly is the process of carrying out broaching/spline cutting with the help of broaching machine on the product which already has differently emerged at the previous stage itself. 5.6 The said procedure and the respective photographs are sufficient for us to hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maining period as well. Hence, the order confirming the demand of service tax alleging the job work done by appellant to be Business Auxiliary Service by provided to M/s. Varroc Engineering Pvt. Ltd. is liable to be set aside. 5.8 Coming to the plea of invocation of extended period of limitation, we observe that in Para 39 of the impugned order, the appellant is alleged to have suppressed the value of taxable services. The entire above discussion has already held that appellant was not providing any taxable services. The question of suppression of such activity becomes absolutely redundant. Since the activity of appellant is held to be an activity amounting to manufacture, question of appellant to seek service tax registration vis-à-vis rendering such activity does not arises. The allegations that ST-3 returns were not filed also becomes redundant. Thus, we hold that it has wrongly been held that non-filing of returns amounts to an act of suppression on part of the appellants. Since appellant was not liable to pay any service tax question of having intention to evade the tax payment is also not applicable. 5.9 The reliance of the adjudicating authority on job work challan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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