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2010 (11) TMI 243 - AT - Service TaxBusiness Auxiliary Service - Manufacture - The appellants manufacture P or P medicines on job work basis - The impugned goods containing alcohol are not chargeable to duty under the Central Excise Act, 1944 but are charged to duty under the MTPA. - the exclusion covers activities which amount to manufacture under Section 2(f) of the Central Excise Act, 1944 - The exclusion is not limited to excisable goods - Provision makes it clear that all activities which amount to manufacture within the meaning given under Section 2(f) of the Central Excise Act, 1944 get excluded, whether or not such manufacture results in an excisable product charged to duty under the Central Excise Act, 1944, or under any other Act such as the MTPA or such manufactured product is totally exempt - The impugned goods are manufactured products, the activity of manufacturing the same by the appellants for their clients clearly falls outside the purview of the levy of service tax under the category Business Auxiliary Service - Hence, set aside the impugned order and allow the appeal.
Issues:
Manufacture of impugned goods containing alcohol - Service tax under Business Auxiliary Service - Interpretation of statutory provisions. Analysis: The case involved the appellants manufacturing excisable medicines and additional goods containing alcohol on a job work basis. The dispute centered around whether the manufacture of these goods attracted service tax under the Finance Act, 1994, specifically under the category of 'Business Auxiliary Service'. The period in question was from August 2006 to September 2008. The definition of 'Business Auxiliary Service' at that time included the 'production or processing of goods for, or on behalf of the client', but excluded activities amounting to 'manufacture' under the Central Excise Act, 1944. It was crucial to determine whether the exclusion covered all activities amounting to manufacture, regardless of whether the goods were excisable or not. The Tribunal analyzed the statutory provisions and concluded that the exclusion under 'Business Auxiliary Service' was not limited to excisable goods. They emphasized that any activity amounting to manufacture as per Section 2(f) of the Central Excise Act, 1944, would fall under the exclusion. In this case, the impugned goods were clearly manufactured products within the meaning of Section 2(f) of the Central Excise Act, 1944. Since these goods containing alcohol were not chargeable to duty under the Central Excise Act but under the Medicinal & Toilet Preparations Act, the Tribunal held that the activity of manufacturing these goods for clients did not attract service tax under the category of 'Business Auxiliary Service'. The Tribunal's interpretation was supported by previous decisions and a circular letter by the Board. Consequently, the Tribunal waived the pre-deposit requirement, set aside the impugned order, and allowed the appeal. Both the stay petition and the appeal were granted in favor of the appellants.
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