Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Tax Research Unit
Circular No. 143/12/ 2011 – ST
North Block, New Delhi
26th May, 2011
To
Chief Commissioners of Central Excise and Service Tax (All),
Director General (Service Tax),
Director General (Central Excise Intelligence),
Director General (Audit),
Commissioners of Service Tax (All),
Commissioners of Central Excise and Service Tax (All).
Madam/Sir,
Subject: - processing for or on behalf of client, in relation to agriculture –
causing sale or purchase of agricultural produce -- reg.
Representations have been received that client processing of tobacco involving
threshing and drying of tobacco leaves and client processing of raw cashew
involving roasting/drying, shelling and peeling of raw cashew to recover kernel,
are considered by the field formations as not falling within the meaning of the
expression “in relation to agriculture” appearing in
notification 14/2004-ST (as
amended) dated 10th September, 2004, resulting in avoidable disputes and
litigation.
- These representations have been examined. In the cases represented, the
agricultural produce namely tobacco or raw cashew, which are subject to client
processing retains their essential characteristics at the output stage and
therefore the processes undertaken on or behalf of client should be considered
as covered by the expression ‘in relation to agriculture’. Client processing
which falls under business auxiliary service undertaken on the primary
agricultural produce namely tobacco or raw cashew, does not result in any change
in their essential character of tobacco or cashew. In the light of the above
principle (i) process of threshing and drying of tobacco leaves and thereafter
packing the same and (ii) processing of raw cashew and recovering kernel,
undertaken for, or on behalf of, the clients by processing units are covered by
the expression “... processing of goods for, or on behalf of, the client.....and
provided in relation to agriculture,...” appearing in the said notification.
- Also where the commission agents stationed abroad provide business auxiliary
service to promote the export of rice, said business auxiliary service is
covered by notification 13/2003-ST(as amended) because, the word ‘rice’ is
mentioned under the explanation to the term ‘agricultural produce’, in the
inclusive portion along with other items like cereals, pulses, etc.
- Trade Notice/Public Notice may be issued to the field formations accordingly.
- Please acknowledge the receipt of this circular. Hindi version to follow.
Samar Nanda)
Under Secretary, TRU
Tel: 011-23092037
F.No.332/37/2010-TRU