Order Date – 16 April 2024

Key Pointers –

• The Applicant, M/s Perma Pipe India Private Limited, receive bare M.S. pipes on job work basis under delivery challan and after carrying out the necessary process of adding PU Foam and PE film/HDPE jacket, they send back the pre-insulated M.S. pipes to customers.
• The issue involved here is whether the activity of insulating of bare M. S. Pipes provided by the customers on job work basis by using PU Foam and PE, film/HDPE jackets owned by the applicant would be classifiable under clause (iv) of Sr. No. 26 or under Sr. No.27 of notification No. 11/20 17-CT(Rate) dated 28.6.2017?
• The AAR observed that Tax Research Unit of CBIC vide its aforementioned circular clarified that there is a clear demarcation between entries at items 26(id) & 26(iv); that item (id) covers only job work services as defined u/s 2(68), ibid ie services by way of treatment or processing undertaken by a person on goods belonging to another registered person. 
• What this means is that the process may or may not result in manufacture. Further circular states that Sr. No. 26(iv) specifically excludes services covered under entry (id) & therefore covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under CGST Act.
• Thus, it was ruled that in respect of services by way of treatment or processing undertaken by the applicant on goods belonging to another registered person, the same would be classified under 26(id) of notification no. 11/2017-CT(Rate), ibid, under the heading 9988. Likewise, for services by way of treatment of processing undertaken by the applicant on physical inputs which are owned by persons other than those registered under CGST Act, would be classified under 26(iv) of notification no. 11/2017-CT(Rate), ibid, under the heading 9988.