The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the activity of powder coating is classifiable under business auxiliary service and hence service tax is leviable.
The appellant, M/s. Molax Powder Coatingis engaged in the process of “powder coating” on job work basis to M/s. Kanchi Fabrications (P) Ltd. (‘KFPL’) and this prompted the Revenue, for the period from July 2006 to October 2008, to issue a show cause notice thereby proposing to demand service tax under the category of ‘business auxiliary service’.
The only issue that is to be decided is: whether the activity of job work, as involved in the present case, rendered by the appellant would amount to manufacturing activity so as totake the same out of the purview of ‘business auxiliary service’ under Section 65 (19) of the Finance Act, 1994.
The Consultant for the appellant submitted, at the outset, that under similar set of facts, the co-ordinate Mumbai Bench of the CESTAT in the case of M/s. Endurance Systems India Pvt. Ltd. v. Commissioner of Central Excise and Customs, Aurangabad has held that the activity, inter alia, of powder coating would amount to “manufacture”, which were cleared on payment of duty and thus, the same would not come under the purview of business auxiliary service.
The Adjudicating Authority has referred to the decision of theApex Court in the case of M/s. Gujarat Steel Tubes Ltd. v. State of Kerala, to hold that the activity of powder coating was classifiable under business auxiliary service.
The Coram comprising Vasa Seshagiri Rao, Technical Member and P Dinesha, Judicial Member observed that “The decision of the Apex Court in the case of M/s. Gujarat Steel Tubes Ltd and orders of other CESTAT Benches would prevail and accordingly, we hold that the issue is answered against the appellant.”
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