2012 (6) TMI 362 - AT - Service Tax

Demand of Service Tax, interest and penalty - services of Commission Agent based in UK - Business Auxiliary Services - denial of exemption Notification No.13/2003-ST contention of appellant that processes undertaken like threshing and drying do not make the unmanufactured tobacco as processed tobacco, the applicants are eligible for the benefit of exemption notification Held that - after procuring the unmanufactured tobacco from the growers, undertakes processes. Product should be considered as processed tobacco for the purpose of interpreting Notification No. 13/2003 and therefore they may not be eligible for the exemption. - stay granted partly.

Summary

Issues:
Demand of Service Tax confirmed, denial of exemption Notification No.13/2003-ST, eligibility for exemption, interpretation of processed tobacco, waiver of pre-deposit, stay of recovery.

Analysis:

1. Demand of Service Tax Confirmed:
The judgment pertains to two appeals where demands of Service Tax were confirmed along with interest and penalties. The demands were related to specific periods, and the exemption Notification No.13/2003-ST was denied.

2. Denial of Exemption Notification No.13/2003-ST:
The appellant sought exemption under Notification No.13/2003-ST, claiming that the processes undertaken did not result in the production of processed tobacco, making them eligible for the exemption. The advocate relied on a Board's Circular to support this argument.

3. Eligibility for Exemption:
The Department argued that the processes undertaken by the appellant, such as threshing and drying, transformed the unmanufactured tobacco into processed tobacco, rendering them ineligible for the exemption under Notification No.13/2003-ST.

4. Interpretation of Processed Tobacco:
The Tribunal analyzed the processes undertaken by the appellant and concluded that, despite the product being treated as unmanufactured tobacco for excise purposes, it should be considered as processed tobacco for the purpose of interpreting the exemption Notification. This interpretation influenced the decision on the eligibility for exemption.

5. Waiver of Pre-deposit:
The appellant requested a waiver of the pre-deposit of dues as per the impugned order. However, the Tribunal held that the appellant did not establish a prima facie case for a total waiver. Instead, they directed the appellant to deposit 50% of the demand in each case within a specified timeframe.

6. Stay of Recovery:
Upon compliance with the deposit requirement, the Tribunal waived the balance amount of dues as per the impugned order and stayed the recovery thereof until the disposal of the appeals. This decision provided temporary relief to the appellant regarding the payment of the remaining dues.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal, including the confirmation of Service Tax demands, the interpretation of processed tobacco, and the decision on the waiver of pre-deposit and stay of recovery pending appeal.