The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that machining of casting is manufacture and does not Business Auxiliary Service and hence not taxable.
The appellant, Ramaben Parmar, has carried out the job work on the casting supplied by the principal manufacturer for machining and other process to make the parts for use in the manufacture of final product of the principal manufacturer. The appellant also rented their premises, the revenue has demanded service tax on the job work under the category of Business Auxiliary Service and service tax on renting of Immovable property.
P P Jadeja, consultant appearing on behalf of the appellant submits that as regard the job work done by the appellant, the process which involved is from the rough casting by the process of machining, the rough cast was converted into part of the final product and returned to the principal manufacturer.
The Counsel further submitted that the activity is clearly of manufacturer in terms of Section 2(f) of Central Excise Act, 1944 which is excluded from the service of Business Auxiliary Service therefore, the same is not taxable being the domain of the central excise.
Vijay G. Iyengar, Assistant Commissioner (AR) appearing on behalf of the revenue reiterated the finding of the impugned order.
The Tribunal expressed its view that the appellant has converted the casting by process of machining into a part which is used by the principal manufacturer in the manufacture of their product. The conversion from rough casting into parts by process of machining clearly falls under the terms ‘Manufacturer’ in terms of Section 2(f) of Central Excise Act, 1944.
The Bench noted that the Business Auxiliary Service clearly excludes the activity which amounts to manufacture in terms of Section 2(f) of Central Excise Act, 1944 therefore, the appellant’s activity of job works i.e. machining of casting is amount to manufacture hence, the same is out of the purview of Business Auxiliary Service hence cannot be taxed under the said category.
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