2013 (2) TMI 410 - AT - Service Tax

Maintenance or Repair Service Whether retreading old and used tyres falls under the category of Maintenance or Repair Service or manufacture Assessee is in the business of retreading old and used tyres Paid VAT on material used in connection with retreading of the tyres Claims that it is manufacture and if it is service he is eligible for Notification no. 12/2003 Held that - Mere payment of VAT does not make eligible for the benefit of Notification No. 12/03 Prima facie retreading activity will not amount to manufacture However benefit of Notification No. 12/03 may be available in view of the decision of the Tribunal in the case of Chakita Ranjini Udyam Decided partly in favour the assessee.

Summary

Issues:
1. Confirmation of duty amount under "Maintenance or Repair Service" category.
2. Eligibility for benefit under Notification No. 12/03 for activities related to retreading old and used tyres.
3. Financial hardship plea and pre-deposit amount directed by the Tribunal.

Confirmation of duty amount under "Maintenance or Repair Service" category:
The Tribunal heard both sides on the stay petition and noted that the appellant is engaged in the business of retreading old and used tyres. The impugned order confirmed a total duty amount of Rs.14,05,302 under the category of "Maintenance or Repair Service," along with interest and penalties imposed under various sections.

Eligibility for benefit under Notification No. 12/03 for activities related to retreading old and used tyres:
The appellant's advocate challenged the order on several grounds, arguing that the retreading of tyres with a warranty should be considered as the manufacture of tyres. Alternatively, if treated as a service, they should be eligible for the benefit of Notification No. 12/03 due to VAT payment on materials used. The advocate also cited a Tribunal decision extending the benefit of the notification in a similar case. The Tribunal, after considering the submissions, did not agree that the retreading activity amounts to manufacture but found that the benefit of Notification No. 12/03 may be available based on the precedent. The Tribunal directed the appellant to deposit a sum of Rs.2,00,000 within six weeks, considering the payment already made and the plea of financial hardship.

Financial hardship plea and pre-deposit amount directed by the Tribunal:
The appellant had paid a sum of Rs.1,77,300, and the advocate highlighted financial hardship due to heavy losses. The Tribunal, after considering the facts and circumstances, directed the appellant to deposit Rs.2,00,000 within six weeks and report compliance. Upon such pre-deposit, the Tribunal waived the pre-deposit of the balance amount of dues and stayed recovery until the appeal's disposal.