TDS for labour job from excise registered vendor

Dear all,

Please let me know the solution for the following querry:

We have awarded a  labour job for fabrication of the steel structural material.  The vendor is registered under central excise.  The raw materials are consigned to the vendor name and they take the ED cenvat credit. We pay the ED on the Finished product (based on our sale value) after adjusting for the Cenvat availed by the vendor. We also deduct TDS from their labour payments since its purely a labour work (Fabrication of Material). The vendor wants to know the follwoing

1) Since there is no sales involved, why Serivice tax is not payable

2)Why TDS is being deducted when ED is being paid

Now, i need a clarification from the CA's, to give me a specific SECTIONS  for my querry.

Regards

Sivaraman R