COMMISSIONER OF CENTRAL EXCISE Vs. PARAMHARI ENGINEERS

JUDGEMENT

(1.) THIS appeal is filed by the Revenue against Order -in -Appeal No. SR/30/NGP/2010 dated 20/01/2010 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur.

(2.) THE relevant facts are that the appellant are engaged in the job of conversion of black bars into bright bars for M/s. Sunflag Iron & Steel Company Ltd., Warthi and M/s. NHK Springs India Ltd., Malanpur under regular agreement with them for which received processing charges from them. The appellant was doing work of straightening, peeling, centre less grinding of steel (carbon, ally, spring, free cutting and stainless steel) thereby converting black bars into bright bars. The Hon'ble Supreme Court in the case of M/s. Vee Kayan Industries vs. CCE Chandigarh [ : 1996 (83) -ELT -262 -SC] held that the conversion of black bars into bright bars does not amount to manufacture. However as per Chapter Note 4 to Chapter 72 of Central Excise Tariff Act, 1985, the above process has been recognized as amounting to manufacture in terms of Central Excise Tariff Act, 1985 w.e.f. 01/03/2005, which implies that prior to 01/03/2005 the above process was not amounting to manufacture. On verification of the records of the appellant for the period 10/09/2004 to 28/02/2005 it was noticed that they have recovered processing charges of Rs. 31,30,543/ -from M/s. Sunflag Iron and Steel Company Ltd., Warthi and M/s. NHK Spring India Ltd., Malanpur, however, they have not paid service tax, on processing charges recovered from the above parties for job work under the category "Business Auxiliary Service". As per clause (v) of Section 65 of the Finance Act, 1994, the activity of production of goods on behalf of the client not amounting to manufacture would attract service tax. It appeared that the above act of the appellant has resulted in non payment of service tax amounting to Rs. 3,19,315/ -. Therefore, the lower authority issued a show -cause notice to the appellant and adjudicated in the aforesaid manner. Aggrieved by the order, the assessee preferred an appeal before the first appellate authority. The first appellate authority after following due process of law, set aside the order -in -original and allowed the appeal.

(3.) AFTER perusing the records with the help of learned DR, we find that the appeal could be disposed of at this stage without any representation from the assessee.