CIRCULAR NO

F.No. 137/151/2006-CX.4

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

New Delhi , the 13 th December, 2006

Subject: Service Tax on the job of ginning and pressing of cotton under business auxiliary service-reg

Please refer to your letter C.No. I (22)15/O&M/STF/06 dt. 27.09.2006, on the above subject.

•  The process of ginning and pressing of cotton does not amount to manufacture. Therefore, if these processes are undertaken 'for or on behalf of the principal/client', the same would fall within the purview of "business auxiliary service".

•  However, notification No.14/2004-ST, dated 10.09.2004, exempts, interalia, production or processing of goods for or on behalf of the client if it is provided in relation to textile processing. Since, cotton fibre is a textile material, and ginning/processing are types of processing thereof, the said processes are covered within the ambit of exemption. Therefore, cotton ginning/pressing is presently exempted from service tax.

Yours faithfully,

(Gautam Bhattachrya)
Commissioner (ST)

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