The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Activity of Printing on PVC amounts to the Activity of Production of Goods and allowed to avail exemption under excise notification.
M/s. Decorative Sleeves Pvt Ltd., the appellant challenged the demand for Service Tax and imposition of penalties. The appellants are manufacturers registered under Central Excise. The appellants undertook job work from three different parties. The job work involved printing on PVC films supplied by their clients and they collected job charges.
The revenue has sought to tax the receipt of the job work charges under the head of Business Auxiliary Service. It was contended that in the case of M/s. Caprihans (India), the Tribunal has held that printing of PVC film/ sheets amounts to manufacture under Section 2 (f) of the Central Excise Act, 1944. The appeal was dismissed by Apex Court on the ground that an application for rectification of the mistake was pending before Tribunal.
It was argued that the activity of printing is exempt from the levy of Service Tax under Business Auxiliary Services in terms of Notification 14/2004-ST. He pointed out that Notification 14/2004- ST dated 10.09.2004, has been modified by Notification No. 19/2005-ST dated 07.06.2005 and Notification No. 19/2006-ST dated 25.04.2006. The activity undertaken by the appellant is exempt.
It was evident that the said Notification exempts the production of goods on behalf of the client and any service incidental or ancillary to the production of goods. The appellants are printing on PVC material supplied by their clients.
It was observed that printing may or may not amount to manufacture, but it cannot be denied the activity of printing is an activity of production and the benefit of Notification No. 14/2004-ST, as amended cannot be denied to the appellant.
The two-member bench comprising Mr Ramesh Nair,(Judicial)and Mr Raju, (Technical)observed that the activity of production of goods is different from the activity of manufacture. It was viewed that the notification not only covers the activity of production of goods but also any activity incidental or ancillary to the production of goods.
While allowing the appeal, the CESTAT held that the activity of printing on PVC done by the appellant can be an activity of production of goods and set aside the impugned order.
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