2018 (7) TMI 511 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (14) G. S. T. L. 571 (App. A. A. R. – GST) – Levy of GST – job-work – Supply of coal or any other inputs on a job work basis by JSL to JEL – Supply of power by JEL to JSL – Job work charges payable to JEL by JSL – whether the transaction between Appellant and JSL qualifies as 'Job Work'?.
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Whether the processing of goods belonging to another person qualifies as job work even if it amounts to manufacture?
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Held that:- Since M/s JSL are not the applicant in the proceedings, the ruling sought by M/s JEL on behalf of M/s JSL was not entertained. In respect of ruling sought by the applicant i.e. M/s JEL regarding conversion of coal (to be supplied by M/s JSL) into electricity, the Authority decided the same as supply of goods and not as job work. The main ground for decision of the Authority lies in the fact that definition of Job Work covers 'process and Treatment' on goods, whereas in the instant case the ope
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L for undertaking process on the same. Rather they are proposing to procure the steam coal which are inputs for the power plant of M/s JEL, the job worker and Intend to avail the credit of duty on the same which is otherwise not available to M/s JEL as their final product, i.e. electricity, does not fall in the ambit of the GST law – Assuming that the steam coal is also an input for M/s JSL as the same is utilized in the manufacture of Electricity which is finally used In the manufacture of final products of M/s JSL, the question arises how the requirements of Section 143 are met with regard to bringing back the Inputs after process/treatment on the inputs, as the inputs in this case are consumed in making electricity.
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The activity undertaken by M/s JEL to convert Coal, to be supplied by M/s JSL, in electricity is not covered under the definition of Job work in terms of the CGST Act. Since goods supplied by M/s JSL will be utilized by M/s JEL in manufacture of new commodity i.e.
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ce to the CGST Act would also mean a reference to the same provisions under the MGST Act. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as "the CGST Act and MGST Act"] by M/s JSW Energy Limited, (herein after referred to as the "Appellant") who has preferred appeal against the Advance Ruling No. GST-ARA-05/2017/B-04 dated 05.03.2018. FACTS OF THE CASE A. JSW Energy Limited, (hereinafter referred to as "the Appellant") is engaged in the business of power generation and having Goods and Services Tax ('GST') Registration NO.27AAACJ8109N1Z8. B. JSW Steel Limited ("JSL"), having GST Registration No.27AAAG4323N1ZG is engaged in manufacture and supply of steel. The manufacturing activity undertaken by JSL requires power on a continuous and dedicated basis. For the said purpose, JSL and the Appellant (both being rela
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1 to the Appeal. The power generated from the aforesaid process on inputs will be supplied back to JSL for which the Appellant would be receiving job work charges as per the rate that would be agreed as per the Job Work Arrangement. During the whole process under the Job Work Agreement, the title In the inputs vest with JSL along with the power generated with the use of such inputs. In addition to power, fly ash and other resultant products generated at power plant using the Inputs will also vest with JSL and the Appellant will have no ownership in such resultant products. E. The Appellant had approached the Advance Ruling Authority (AAR) for seeking an advance ruling under Section 95(a) of the CGST Act, for determination of the applicability of GST on the following issues [The copy of the application filed before the AAR was enclosed as Exhibit – 2 to the Appeal) – I. Supply of coal or any other inputs on a job work basis by JSL to JEL II. Supply of power by JEL to JSL III. Job work c
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Impugned Order, relying on the decision of Manganese Ore India Ltd. V. State of M.P. [(2017) 1 SSC 81] has held that intent of the legislation is not to cover such 'treatment or process' into the ambit of the 'job work' which results into a distinct commodity and thereby amounting to manufacture. iii. The judgments of the courts, relied upon by the Appellant, in relation to job work under the erstwhile regime have been negated on the premise that all the judgments quoted in the application and the additional written submissions are in the context of input tax credit which is not the issue in the current facts. iv. Since JEL and JSL are related parties, any supplies made between them, even without consideration will be subject to GST. The Impugned Order has not responded on the GST implication in respect of the coal and other inputs supplied by the JSL to Appellant on the basis that the transaction pertains to GST liability of JSL and not of Appellant. Being aggrieved b
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er does not dispute the fact that the conditions stated above are getting fulfilled in respect of the transaction between JSL and the Appellant, except condition (i) as stated above. The entire edifice on which the Impugned Order stands is that the resultant product, namely Electricity, is a distinct commodity which is not identifiable with the inputs, hence such activity will be covered under 'manufacture' and being a manufacturing activity, it will not qualify as 'job work'. The relevant extract of the Impugned Order is reproduced below: – Page 9 of the Impugned Order ………..It is very apparent that the goods which are received after job work are in no way identifiable with the goods which were sent for job work. Electricity is a totally new commodity which will be delivered to JSL. To ascertain whether conversion of coal into electricity would tantamount to being 'Job Work', we need to examine the relevant provisions under the GST. …….. &hel
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ovided for the definition of 'job work' as well as 'manufacture', the meaning as understood by the definition of 'manufacture' cannot be read into the words 'treatment or process' as found in the definition of 'job work'. 'Treatment', 'Process' and 'Manufacture' are three different activities recognised by the Legislature. The intent of the Legislature is to restrict the scope of 'job work' to 'treatment' or 'process' and not to extend the same to manufacture. We need not deliberate more on the issue as the emergence of a distinct commodity is very obvious and therefore beyond the applicability of the definition of 'job work' under the GST Act" 4. The Appellant submits that in order to evaluate the terms 'job work' and 'manufacture' reference is made to the definition of 'Job Work' and 'Manufacture' under CGST Act- I. Section 2(68) of the CGST Act defines
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hen it falls within the ambit of manufacture. Therefore, the way terms have been defined under the CGST Act, manufacturing activity is a sub-set of job work. That is to say if a person undertakes processing of raw material / inputs belonging to another person then the said activity would qualify as job work, which if results in emergence of new product, will also be manufacturing activity. Hence, the term 'job work' and 'manufacture' are not mutually exclusive, as is the meaning sought to be given in the Impugned Order. Interpretation adopted in the Impugned Order is contrary to clarification and FAQ issued by Central Board of Excise and Customs ('CBEC') [Renamed as Central board of Indirect tax and Customs] 7. The Appellant would also like to submit that the Impugned order is in contradiction to the clarifications and explanations provided by CBEC which is the nodal national agency inter-alia responsible for administering GST in India. 8. The Impugned Order has
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e goods belongs is called 'principal'. This definition is much wider than the one given in Notification No. 214/86 – CE dated 23rd March 1986. In the said notification, job work has been defined in such a manner so as to ensure that the activity of job work must amount to manufacture. Thus, the definition of job work itself reflects the change in basic scheme of taxation relating to job work In the proposed GST regime. " 10. The Appellant further relies on the clarification issued by CBEC wherein it has been clearly mentioned that job work is an activity which may or may not tantamount to manufacture but still such process or treatment will qualify as job work subject to fulfillment of other conditions prescribed under the CGST Act and rules made thereof. A copy of the clarification issued by CBEC is enclosed with the Appeal as Exhibit – 6. The relevant extract is reproduced herein below: "Job-work sector constitutes a significant industry in Indian economy. It Includ
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the principal and the job-worker." 11. Given the above, it is evident that CBEC itself emphasize on the widening of the scope of job work under the GST Regime which inter-alia includes every kind of processing activity, whether resulting into manufacture or not. Therefore, taking any contrary view would lead to an incongruous situation which is against the explanations and clarification provided by; the CBEC and does not seem to be intent of the Legislature. FINDING CONTRARY TO SETTLED LAW 12. The Impugned Order is also contrary to the settled position by the judiciary on the issue in dispute. It is a well settled position in law inter-alia in terms of the judgment of the Hon'ble Supreme Court and Hon'ble High Court in Ujagar Prints Etc. vs. Union of India and Others (1988 (38) E.LT. 535 (S.C.)), Harrison Synthetic Bristles vs Collector of Central Excise, Bombay (1997 (95) E.LT. 9 (S.C.)) and Sunbel Alloys Co India Ltd. vs Union of India (2015 (316) E.LT. 353 (Bom.)) indi
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credit envisages that duty/tax paid on the input/input services will be available for discharge of duty liability on the finished products. It is not in dispute that the inputs were used in the fabrication/assembly of the finished products. Similarly, it is also not in dispute thot finished products did emerge at the job-workers' premises. In these circumstances, the conclusion drawn by the adjudicating authority that there is no job work Involved In the present case Is a contradiction in terms. A job work might amount to "manufacture" or might not amount to "manufacture". In many instances the job work results In production of a new commodity. For example, in the case of textile fabrics, a Job-worker undertaking the process of bleaching or dyeing of fabrics, new products namely, dyed/bleached fabrics come into existence. Thus, the activities amount "manufacture". Similarly, In the case of a bus body built on a chassis, the activity amounts to "m
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bunal upheld findings of the First Appellant Authority that job worker may undertake an activity which results in manufacture. The relevant extract of the judgment is reproduced below: "11. We also find that the first appellate authority has correctly enunciated the law as to the activity of job work as to how it should be understood and the valuation of the said goods to be done. We reproduce Paragraphs 15 and 16. "15. A job worker may undertake manufacturing of excisable goods on account of others from the raw material supplied to him free of cost, and on return of the goods so manufactured to them he takes job charges i.e. manufacturing expenses plus his manufacturing profits. In some cases, the job worker also uses some of materials of his own and includes their cost in the job charge. After job work is done the excisable goods so manufactured may also be delivered to their agents, or buyers as per their instructions. Since the duty of excise is on manufacture of excisabl
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7 (Tri.- Delhi)) Sanghl Industries Limited vs CCE, Rajkot (2006(206) ELT 575 (Tri.- Delhi)) Sanghi Industries Limited vs CCE, Rajkot (2014(302) ELT 564 (Trl.- Ahmd.)) 18. The above judgments cover Instances where materials (such as naphtha, light diesel oil, furnace oil, etc.) were supplied to the job worker for carrying out a specified process for the purpose of generation of electricity. The relevant extract of the High Court decision in Indorama Textiles Ltd (supra) is reproduced below where the Issues of generation of electricity under a job work model is not even disputed by the Authorities – "8. The fact of electricity being intermediate goods used in manufacture of final product by Respondent No. 1 is not in dispute before us. It is nowhere contended that M/s. IRSL cannot be a job worker and generation of electricity cannot be outsourced. When it can be outsourced, it also follows that Respondent No. 1 need not have a captive power plant Only contention is fuel oil is not r
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not provide for Restrictive Meaning of the word 'process' used in the Definition of Job Work 20. The Impugned Order has held that the word 'process' used in the definition of job work has to be read narrowly so as to exclude activities resulting in manufacture. The Appellant submits that wherever the intention of the law maker is to give a restricted meaning to words used in the definition, the same is either appropriately stated in the definition itself or in any other relevant section of the Act with specific wording to that effect. It is submitted that the CGST Act and the regulations do not in any form or manner stipulate or contemplate to derive a different meaning for the word 'process' when used for 'job work' and when used in 'manufacture' which clearly indicate that the 'process' is to be read without any restrictive meaning. Reference can be made to the definition of 'mixed supply' under the CGST Act which clearly exclud
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ppellant submits that since the terms 'treatment or 'process' have not been defined under the GST legislation, reference is sought to the dictionary meaning which explain the said terms and are reproduced as follows: Process a natural or involuntary operation or series of changes; handle or deal with by a particular process (The Oxford English Reference Dictionary 1995 pg 1152) a systematic series of actions directed to some end (Webster's Encyclopaedic Unabridged Dictionary of English Language pg. 1147) Treatment Subjection to the action of a chemical, physical or biological agent (The Oxford English Reference Dictionary 1995 pg. 1534 ) Subjection to some agent or action (Webster's Encyclopaedic Unabridged Dictionary of English Language pg. 1509) 24. Reference is also sought to judicial precedents wherein the aforesaid terms have been explained. In the matter of Collector of Central Excise vs Rajasthan State Chemicals Works (1991(55) E.L.T. 444(SC)), the Supreme Co
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s which consists only in handling and there may be a process which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material… 25. In light of the above cited meanings and judicial interpretation, it is submitted that the term process is wide enough to cover even a mere handling of materials. Considering the scope of the said term, it is evident that the activities proposed to be carried out by the Appellant would fall within the ambit of the term 'process' or 'treatment' even though it amounts to manufacture. Reliance on the Decision of Hon'ble Supreme Court in Manganese Ore India Limited v. State of M.P. ((2017) 1 SSC 81 ) is Erroneous 26. The Impugned Order considers and hinges on various extraneous factors and aspects, none of which have any bearing whatsoever on the basic legal proposition with respect to the facts of the present matter.
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Ltd vs. DGFT (2016 (3 36) ELT 625 (Del))it was held that it is a settled law that precedent decisions are binding only when factual situation therein fits case under decision. Further, the observations of Courts must be read in the context in which they appear to have been stated. 29. The factual matrix in the Manganese Ores India Limited (Supra) can clearly be distinguished and differentiated from the factual scenario in the present case. In this regard, it is noteworthy that in the facts of Manganese Ores India Limited (Supra) the issue before the Hon'ble Supreme Court was whether the activities employed by the appellants for conversion of mineral ores would be covered by the word ''processing" used In explanation (b) to section 3(1) of Madhya Pradesh Electricity Duty Act, 1949, which defined mine to have the meaning provided to It under the Mines Act, 1952. The said definition is as under: "Mine" means a mine to which the Mines Act, 1952 (No. 35 of 1952) a
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in the same judgment the Hon'ble Apex Court held that the word 'processing' can have a wider meaning which would also include manufacturing. However, in the context of that case the word 'processing' has to be interpreted as per the Mines Act, 1952 and therefore will be restricted to the sense conveyed by the words 'crushing', 'treating' and 'transporting'. The relevant extracts are reproduced below- "…..the word "minerals" used in the aforesaid Explanation under the Act would have reference to the mineral which is mined and is then crushed, processed, treated or transported. The word "processing" used in the Explanation has to be interpreted in the context and for the purpose of the said item. Process can be given a wide or a narrow meaning. In the context in which it is used in the Explanation, we are disposed to think that it must be given a meaning which emerges when we apply the rule of noscitur a sociis which
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s the word 'Manufacturing services'. 34. The applicable rate of tax in respect of services are provided in the Notification No. 11/ 2017 -Central Tax (Rate) dated 28.06.2017 (as amended from time to time) ('Rate Notification'). For certain specified job work services, the applicable HSN Code under the Rate Notification is '9988'. SI No. Chapter, Section or "heading Description of Service Rate (per cent.) Condition 26 Heading 9988 (Manufacturing services on physical inputs (goods) by owned others) (i) Services by way of job work in relation to- (a)…(e) (ea) manufacture of leather goods or foot wear falling under Chapter 42 or 64 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) respectively; (f) all food and food products falling under Chapters 1 to 22 In the First Schedule to the Customs Tariff Act, 1975 (51of 1975); (g)….; (h) manufacture of clay bricks falling under tariff Item 69010010 In the First Schedule to the Customs Tariff Act,
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the Impugned Order holding that proposed activity of the Appellant does not amount to job work since it amounts to manufacture is bad in law and must be set aside. 36. In view of the various submissions made above and on the harmonious reading of the CBEC clarifications, judgments cited in earlier paragraphs to this Appeal, definitions under CGST Act and dictionary meanings of the relevant words, it is submitted that- (i) 'Job Work' under GST has been given a wider meaning as compared to the earlier regime. (ii) Even under the erstwhile regime, 'Job Work' covered manufacture and even under GST regime, it covers manufacture as provided in the CBEC clarification. (iii) Process undertaken on goods belonging to another person is 'Job Work', independent of whether the said process amounts to manufacture or otherwise. (iv) There is no restriction under GST law that treatment or process that amounts to manufacture cannot be covered under 'Job Work'. In-fact, th
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ity with different name and use, thereby rendering the entire process/activities undertaken by the appellant as manufacture in terms of the definition as provided under Section 2(72) of the CGST Act, 2017. Thus, the process/treatment performed by the appellant on the coal supplied by JSL would not be covered under the Job work. The Appellant's representative, however, differed with the ruling passed by AAR and argued that as per the provision of Section 2(68) of the CGST Act, 2017 "Job work" means any treatment or process undertaken by a person on goods belonging to another registered person and the expression "Job worker" shall be construed accordingly. Thus any process/activity undertaken by a person would qualify as job work if all of the following conditions are fulfilled and consequently the Principal will be allowed to send the goods without payment of tax viz. a. Treatment or process should be undertaken by a person; b. Such treatment or process should be
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to whom the goods belong is called 'Principal'; (iv) That Job work sector includes outsourced activities that may or may not culminate into manufacture The appellant in their support referred to 2nd Edition : 31st March, 2017 (updated as on 1st January, 2018 of FAQ on GST issued by CBIC and the clarification issued by CBEC on Job work) The appellant further deposed that the impugned order is contrary to the Settled position by the Judiciary on 'Job work' relying on the following judgment (1) Ujagar Prints Etc. Vs. Union of India & Others (Supreme Court) , – (2) Harrison Synthetic Bristles Vs. Collector of Central Excise Bombay (Supreme Court) ; (3) Sunbel Alloys Co. India Ltd. Vs. Union of India) Bombay High Court) (4) Eaton Fluid Power Ltd. Vs. Commissioner of Central Excise, Pune (Tri- Mumbai) (5) Commr. Of C.Ex. Mumbai – IV Vs. Ruby Mills Ltd. (Tri- Mumbai) The representative further relied on the following judgement regarding generation of electricity being int
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hers. During the course of hearing, when being asked about the present system for supply of electricity to their manufacturing units and whether they have any captive coal-run power plant in their manufacturing units for generation and supply of electricity, the appellant's representative deposed that they would be making further submissions in this case regarding the current power supply arrangement to M/s. JSL and whether M/s. JSL have any captive Coal fired power plant units in any of their manufacturing premises for generation of electricity or otherwise. Also when the Departmental representative argued that coal is not specified as import products for the export of Hot Rolled Non Alloy Steel Plates /Sheets/hoops & Strips under Export Code C508 as per SION specified by DGFT, the appellant's representative deposed that they were very much sure about the existence of coal in the import products list for the export of Hot Rolled Non Alloy Steel Plates /Sheets/hoops & S
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ard Input Output Norms specified as per the Import Export Policy. The jurisdictional officer deposed that M/s. JSL are not having 'in-house coal fired power plant' for production of electricity for captive consumption and hence coal cannot be considered as input and hence cannot be sent for further processing under Job work procedure without payment of applicable tax. He further deposed that as per the procedure of the Job work under CGST Act, 2017, goods belonging to another registered person are subjected to some treatment or process and are required to be sent back to the 'Principal' within a specified time after the completion of the Job work or otherwise. Whereas in the instant case, the coal to be supplied by the 'Principal' will be used by the Job worker for the generation of electricity and the ultimate goods i.e. electricity will be supplied back to the 'Principal' and not the inputs which have been treated upon or processed upon by the Job work
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d that the Power Plant owned by them where the proposed Job work activity on the coal supplied by M/s. JSL Is to be undertaken Is a Captive Power Plant of JSW group. In respect of this, the appellant have enclosed the following documents (i) A copy of the Board Resolutions dated 03.03.2011 wherein a resolution was passed for seeking approval to make units III and/or IV captive units of Ispat Industries. The said Ispat industries is currently the Dolvl, Maharashtra Plant of JSW Steel Limited (JSL). (ii) A copy of the letter dated 26.04.2011 written to the Maharashtra State Electricity Distribution Co. Ltd. for the purpose of captive power plant. (iii) A copy of the letter dated 20.04.2012 wherein open access permission was provided by the Maharashtra State Electricity Distribution Co. Ltd. for wheeling of power for the captive power plant at Jaigad, Ratnagiri. (2) The appellant Inter-alla further submitted that Coal is one of the important and integral Inputs used by JSL for the manufac
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rse or furtherance of business. To substantiate this claim, they cited various court and tribunal judgments. (7) In para 5.9,they relied upon various Courts and tribunals judgments wherein credit have been allowed on inputs which have been used in the generation of electricity which in turn have been used to manufacture final products. (8) In para 5.10, they further submitted that even in the context of erstwhile definition of inputs, coal or any other inputs for generation of electricity (which is further used to manufacture an entirely different products) have been held to qualify as inputs for over two decades. (9) In para 6.5, they inter-alia submitted that resultant intermediate goods may be different from the inputs sent by the Principal. For this, they cited following court judgment where job work has been accepted even when the identity of the inputs have been lost, when the intermediary goods are received back from the job worker. (a) Prestige Engineering (India) Ltd. V/s. Col
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main ground for decision of the Authority lies in the fact that definition of Job Work covers 'process and Treatment' on goods, whereas in the instant case the operations carried out by M/s JEL are beyond the process and treatment, and thus not covered under the definition of Job Work. 42. The Appellant, through written submissions and during personal hearing, have drawn our attention towards various judgments and erstwhile juridical position of Job Work, summarizing that manufacturing may or may not take place during a job work activity. The erstwhile Notification No. 214/86 under Central Excise Act also exempted the goods where manufacturing took place. Under the GST regime as argued also before us and seen from the definition per se, the scope of Job work appears to be wider. Accordingly, we are not inclined to concur with the views of AAR and we hold the view that Job work may or may not involve manufacturing 43 The moot question before us to decide is therefore is whether
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ilized in manufacture of intermediate goods used in the manufacture of final product. In this case, M/s. JSL are manufacture of Steel and steel products and M/s JEL are engaged in production of electricity, using coal as main input we have gone through the citations and note that in none of these the central issue of decision was on the subject of JOB WORK- All these judgments pertain to the admissibility of the Cenvat/Modvat credit on the goods utilized for manufacture of intermediate goods, which is not the case here. The Applicant had not gone before the AAR on issue of admissibility of credit of tax paid on the inputs. The impugned application pertains to the consideration of activity as Job work, and we would be restrict ourselves to the issue involved. 45. In order to elaborate further, we reproduce the definition of 'Job Work' under CGST/MGST Act as under: 'Job work means any treatment or process undertaken by a person on goods belonging to another registered person&
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l will send the inputs to the job worker for conducting any treatment/process/ which may, or may not amount to manufacture) and shall bring back the same after completion of job work or otherwise Therefore the goods sent to the job worker should be the Inputs of the Principal here. M/s JSL are proposing to be the Principal, so the Inputs should belong to them. 46 During the course of the hearing on 19 06.2018, the Departmental Representative had raised an issue that the goods being proposed to be sent to the Job Worker M/s JEL, i.e. coal, are the Inputs for M/s JEL for their final product. i.e Electricity and not the Inputs for the Principal, i.e. M/s JSL as they are manufacturer of Steel and not power. Also. Coal is not mentioned in their SION(Standard Input Output Norms) The Advocate for the appellant opposed the same and maintained that Coal is mentioned In the SION for the final products of M/s JSL, and that they would produce a copy of same during their additional submission. Howe
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and Intend to avail the credit of duty on the same which is otherwise not available to M/s JEL as their final product, i.e. electricity, does not fall in the ambit of the GST law. 47. Assuming that the steam coal is also an input for M/s JSL as the same is utilized in the manufacture of Electricity which is finally used In the manufacture of final products of M/s JSL, the question arises how the requirements of Section 143 are met with regard to bringing back the Inputs after process/treatment on the inputs, as the inputs in this case are consumed in making electricity. 48. Further, we find from the details of the permissions received from Maharashtra State Electricity Distribution Co. Ltd.(MSEDCL) that M/s JSL is to be supplied electricity through the distribution system of MSEDCL, which means that electricity, being the intermediary goods after processing of the inputcoal, is being uploaded by M/s JEL to the MSEDCL power grid and this grid In turn Is being used to obtain the electric
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on of the Section 143(1)(a), namely to bring back the inputs to the premises of the principal, fulfilled. 49. The facts of the case cited by the Appellant in the matter of M/s Essar Steel Ltd. said to having similar arrangements are different from this case, as in that matter the entire electricity generated in was first directly transmitted to M/s Essar. Only the excess electricity after being used for manufacture, was being exported to Grid. Thus, in the case of Essar, the supply of inputs after processing was not dependent on a third person or entity till the goods were returned back to the Principal in full. In case of M/s Kirloskar Ferrous Industries Ltd., the generation of electricity was within the premises of the principal. The cases cited therefore are distinguishable. 50. To take the argument of eligibility of the process to be job-work, we rely on the Hon'ble Supreme Court's pronouncement in the matter of M/s Prestige Engineering (India) v/s Collector of C.Ex. Meerut
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e expression 'job work' mean? On this question, the Explanation is not of much assistance. The Concise Oxford Dictionary assigns several meanings to the expression job' but the relevant meaning having regard to the present context is "a piece of work especially one done for hire or profit". The expression job work' is assigned the following meaning . "work done and paid for the job". The Notification, It is evident, was conceived in the interest of small manufacturers undertaking job-works. The idea behind the Notification was to help the job-workers – persons who contributed mainly their labour and skill, though done with the help of tools, gadgets or machinery, as the case may be. The Notification was not intended to benefit those who contributed their own material to the articles supplied by the customer and manufactured different goods. We must hasten to add that addition or application of minor items by the job-worker would not detract from the
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ssed by him (job worker) considering the fact that typically the Job workers are small persons who are unable to comply with the discrete provisions of the law. Therefore, we hold that job work on the scale as in this case before us could not have been envisaged when the provisions were outlined. 52. In the matter before us, the appellant have not submitted the following: (i) The agreement or proposed agreement between M/s JSL and M/s JEL for the process of job work to understand about the quantity and value of the inputs being supplied by the principal and the amount and quantity of the inputs/ material being used by the job worker to the inputs supplied by the principal to carry out the job work process. (ii) The detail manufacturing process of M/s JEL for production of Electricity mentioning the name, quantity and value of the inputs. (iii) The procedure/process for accounting for the Inputs received from M/s JSL by M/s JEL and co-relation thereof with the goods supplied after job w
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steel pipes by itself or gets them fitted In another unit. Thereafter, adopters are fitted on the sides of the cops and then the plastic sleeves are fitted on the cylinders of the cops. This is not a case where the rings and the adopters and sleeves are supplied by Modipon. it is not suggested that the value of rings, adopters and sleeves is very small vis a vis the value of steel pipes. The additions made by the appellant are not minor additions; they are of a substantial nature and of considerable value. Except the pipes, all other items which go into the manufacture of cops are either purchased or procured by the appellant himself and he manufactures the cops out of them The work done by him cannot be characterised as a job-work If all the requisite rings, adopters and sleeves hud also been supplied by Modlpon, it could probably have been said that the appellant's work Is In the nature of job-work. But that is not the case here The Tribunal was, therefore, right in holding that
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pinion that the answer is negative in view of the Apex Court judgment as only minor additions by the job worker on the inputs provided by the principal is envisaged in the law. 54. The various judgments relied upon by the Appellant on various issues are not of much help to them on following grounds: (i) None of the said judgments are under the statute in which the Advance Ruling was sought and appeal was preferred against the said Ruling. (ii) None of the judgments involved any decision about any activity to be job work or not, except in the matter of M/s Prestige Engineering(lndia) Ltd. (iii) The facts and circumstances of the cases cited by the appellant were different from the facts of the instant case. 55. We would also like to distinguish the said judgments as under: (i) Essar Steel Ltd. v/s Commissioner of C. Ex. Surat-I, 2001(129) ELT 213(Tri. Mum.): The issue in the above case was an interpretation of the term 'within the factory of production'. There is no such clause
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e was not whether the activity is a job work or not. Also, it was never contended by the revenue that the said activity is not job work so the Court had no occasion to decide the same ( Para 8 of the order). As such the decision primarily is on allowance of credit and not on whether the same is job work or not. Also, the captive power plant was with M/s Indorama Synthetics Ltd., separated by just a wall by M/s Indorama Textiles Ltd. and hence the return of goods after job work was not interrupted/regulated by a third party. (iii) Vikram Cement V/s Commissioner of Central Excise, Indore.2006(194)ELT 3(S.C.): The dispute before the Larger Bench of the Apex Court was whether credit on explosives used in quarrying limestone which was in turn used to manufacture of cement was available as the limestone mines were outside the factory and the Court had to interpret the words ' within the factory of production' occurring in Rule 57B. As can be seen from the above text, the issue in thi
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of electricity, which was the basis on which the judgement was given, as is clearly evident from Paragraph 22 of the order. Also, as per para 2 of the said judgment- "The principal raw material for manufacture of petrochemical products is Naphtha which is procured from India Oil Corporation or other indigenous oil refineries or by direct import from overseas on payment of duty. A small portion of the Naphtha, either as such, or after being partially processed, is also sent to a power plant for generation of electricity or steam". In the instant case, the goods proposed to be sent for job work(Steam Coal) are not the raw material of the Principal. (v) SANGHI INDUSTRIES 2006 (206) ELT 575 ( Tri Del) / SANGHI INDUSTRIES ( 2014 302 ELT 564) The issue whether the power plant was a job worker or not was not presented before the Tribunal for adjudication. The issue was of admissibility of credit. Also as in the case of Vikram Cement (cited supra), the primary issue was the interpre
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within the premises of the Principal and all the inputs viz. Atmospheric Air, Industrial water and Electricity used for manufacture of Industrial gases belonged to the principal and were supplied by the principal. In the instant case, it is not possible for the principal to provide all the major inputs to the job worker as the Air and water, constituting substantial quantity and value, belongs to M/s JEL as the proposed activity will be carried out in the premises of M/s JEL. Also, we need to note here that the advance ruling in other States are not binding on us nor do they have any precedential value We also observe in all other judgments, the central issue was never the applicability of job work on the some activity being undertaken. It is only in the matter of M/s Prestige Engineering (India) Ltd., Apex Court has dealt with the issue in detail, as there were divergent opinions/orders by Tribunals and High Courts. 56. Thus, the Appellant has not provided documentary evidences, durin
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under the definition of Job work in terms of the CGST Act. Since goods supplied by M/s JSL will be utilized by M/s JEL in manufacture of new commodity i.e. electricity (though attracting NIL rate of duty), the process is manufacture and the same will be considered as supply of goods and not service. 57. Accordingly, we pass the following order: ORDER In view of the above discussions and in terms of Section 101(1) of the CGST Act 2017 and MGST Act 2017, we hold that- The processing undertaken by a person on the goods belonging to another registered person qualifies as job work even if it amounts to manufacture provided all the requirements under the CGST/MGST Act in this behalf, are met with. The Transaction between Appellant and M/s JSL does not qualify for job work under Section 2(68) and section 143 of the said Acts. The Order of AAR Stands modified in terms of the above order. The appeal filed by M/s JEL stands dismissed with above order – Case laws – Decisions – Judgements – Ord
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