Service tax on process amounting to manufacture

This query is : Resolved

Kushal Biswas (Querist)
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27 December 2013 A Ltd. produces wind energy which is not excisable. For production of wind energy, it requires Wind mill.
A Ltd. engages job worker, B Ltd., for manufacture of wind mill and supplies all the necessary raw materials to B Ltd. for manufacture of same.
B Ltd. undertakes the job work and does the necessary fabrication and manufactures the components of wind mill & erects & commissions the wind mill at the site of A Ltd.
Wind mill is exempt from Excise Duty vide Notification no. 12/2012-CE.
I understand:
No service tax is payable on ‘any process amounting to manufacture or production of goods’ by job-worker, as that activity falls under the negative list under Section 66D (f) of the Finance Act, 1944. Also, Sl. No. 30 (c) of notification no. 25/2012-ST dated June 20, 2012 exempts ‘carrying out any intermediate production process as job-work in relation to any goods on which appropriate duty is payable by the principal manufacturer’.

In view of the above, kindly advise whether B Ltd. is liable to pay service tax

Annu Agarwal

Annu Agarwal (Expert)
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27 December 2013 Sir,B Ltd is liable to service tax as the principal manufacturer is manufacturng exempted goods and not paying any duty on the same.
The definition of appropriate duty mentioned in the notification explains the same.

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