The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT) has held that the manufacture of excisable goods is excluded from the definition of business auxiliary Services and Service Taxis not demandable.
Gujarat Insecticides Ltd, the appellant engaged in the production and clearance of finished excisable goods. The said production and clearance of goods have been carried on under the authority and subject to the terms and conditions of the Central Excise Registration Certificate. The appellant agreed with one M/s. GCL as per which the appellant was required to produce desired excisable goods on behalf of the said M/s. GCL.
The appellant has carried out the manufacturing ofgoods in terms of section 2(f) of CETA on theinputs and packing materials supplied free of charge by GCL. The appellant has used their specified plant, equipment, machinery, labour, Supervisors, water, electricity and certain consumables and stores in small quantum for the production of excisable goods for and on behalf of GCL.
It was submitted that the said activity was undertaken under the provision of Rule 4 (5) (a) of Cenvat Credit Rules, 2004 and the activity clearly of manufacture cannot be construed as service for charging service tax.
The activity of production or processing under business auxiliary service is exempted under notification no. 8/2005- ST dated 01.03.2005 as the recipient of job work goods is liable to pay excise duty. The demandundermanagement maintenance & repair service is not maintainable.
The demand was confirmed under the head of Management, Maintenance & Repair Service as per section 65(105) (zzg) of the Finance Act, 1994. The Management, Maintenance & Repair service is defined under section 65 (64) of the Finance Act, 1994.
As per the above-said section, the definition of Management, Maintenance & Repair Servicethe main condition is that the Management, Maintenance & Repair Service of the plant shouldbelong to the service recipient and not to the service provider.
A Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) observed that theappellantused theirplant machinery equipment that too for the production of excisable goods on behalf of M/s Gharda Chemical Ltd. The appellant cannot beclassifiedunder Management, Maintenance & Repair Service.
Further held that “the activity per se cannot be treated as service itself for the reason that the activities carried out by the appellant is pure of manufacture of excisable goods with the inputs and packaging material supplied by the GCL and the said manufacturing was done on job work basis on behalf of M/s GCL.”
The Tribunal set aside the impugned order and allowed the appeal. Shri Dhaval Shah, Advocate appeared for the Appellant and Shri Prabhat k Rameshwaram appeared for the Respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
