Query on service tax

Respected All,

Please help me out providing solution in the following case –

A is the manufacturer of Spices which is an Excisable Zero rated products vide Tariff Item No. CH – 0903.10. A, sometimes, gets the manufacturing done through job work by B in it’s premises, a proprietorship organisation not having any Service Tax registration,

The job work is divided in 2 phases –

1. Grinding of Raw Material issued by A resulting in Half Dust (Semi Finished Material) and sending it Back in such semi finished stage to A;

2. Grinding of Raw Materials and Packing of such semi finished goods into deliverable Finished Goods (Final Product) using Packing Material issued from A and thereafter sending it back to A.

The whole process is undertaken by B using the Machines provided by A in the premises of B.

The processing charges paid to B are more than Rs. 10.00 Lacs per annum.

Now the queries are –

1. Whether any Service Tax liability attracts on B for such processing work?
2. If the answer to 1 is in affirmative and since B is not registered, whether the liability falls back in the hands of A?

Thanks and regards,

Kingshuk Dhar.