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ST - Since principal manufacturer is clearing 'Jute Loom Machine Assembly' manufactured on job work by applicant @ Nil rate of CE duty by availing benefit of Notfn 12/2012, benefit of notfn 25/2012-ST cannot be extended to applicant: AAR

By TIOL News Service

NEW DELHI, SEPT 01, 2016: THE applicant, a labour contractor, proposes to undertake job work for M/s Nipha Exports (P) Ltd - a manufacturer, on contract basis at the rate of Rs.2000/- per "Jute Loom Machine Assembly" at the premises of said M/s Nipha Exports.

For this, Agreement dated 12.06.2015 with respect to job contract between the applicant and M/s Nipha Exports (P) Ltd was entered with.

The applicant is before the Advance Rulings Authority &seeks a ruling on the following question -

Whether applicant is eligible for exemption from payment of Service Tax on job work undertaken inside the factory of the manufacturer as per Notification No. 25/2012-ST dated 20.06.2012, as amended?

The Authority observed that Notification No. 25/2012-ST dated 20.06.2012, as amended by Notification No. 06/2015 dated 01.03.2015 inter-alia exempts following taxable service -

30. Carrying out an intermediate production process as job work in relation to -

(c) any goods excluding alcoholic liquors for human consumption on which appropriate duty is payable by the principal manufacturer;

Further, sub-clause 2(z) of the said notification defines "principal manufacturer" as -

"principal manufacturer" means any person who gets goods manufactured or processed on his own account from another person.

In order to ascertain the applicability of Notification No. 25/2012-ST, Commissioner of Central Excise in-charge of M/s Nipha Exports (P) Ltd was asked for a report and who informed that M/s Nipha Exports (P) Ltd is availing Central Excise duty exemption [@ Nil duty] on the manufacture of "Jute Loom Machine" falling under Tariff Head 8448 3220 vide Notification No. 12/2012-CE dated 17.03.2012 (S. No. 251).

The Authority, therefore, observed -

+ Inasmuch as since the "principal manufacturer" i.e. M/s Nipha Exports (P) Ltd is availing benefit of exemption Notification No. 12/2012-CE dated 17.03.2012 (S. No. 251) on the manufacture of "Jute Loom Machine" on job work by the applicant, benefit of exemption Notification No. 25/2012-ST dated 20.06.2012, as amended, cannot be extended to the applicant.

Conclusion: Applicant is not eligible for exemption of Service Tax in respect of job work undertaken in the factory of the manufacturer in terms of Notification No. 25/2012-ST dated 20.06.2012, as amended.

(See 2016-TIOL-24-ARA-ST)


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