2013 (10) TMI 1109 - AT - Service Tax

Waiver of pre deposit - Job Work - Exemption for service tax - business auxiliary service - Penalty u/s 78 - Held that - Forged axles and wheels were received by the applicants against Annexure-II Challans as prescribed under Rule 4(5)(a) of CENVAT Credit Rules, 2004 for carrying out the process on job work basis. The applicant carried out the necessary processes of machining, like grinding, cutting and drilling etc. as per the direction of the principal raw material supplier M/s. Durgapur Steel Plant. After carrying out such processes these goods were returned to the raw material supplier i.e. M/s. Durgapur Steel Plant, where further processes viz. ultrasonic testing, painting etc. were carried out so as to make the wheels and axles marketable. It is not in dispute that M/s. Durgapur Steel Plant discharges excise duty on the said finished wheels and axles which are cleared to Indian Railways. In these circumstances, we find that the applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. Accordingly, all dues adjudged is waived and recovery thereof stayed during pendency of the Appeal - Stay granted.

Summary

Issues: Application for waiver of pre-deposit of Service Tax and penalties under various provisions of the Finance Act, 1994.

In this case, the appellant sought waiver of pre-deposit of Service Tax amounting to Rs.2.15 Crores and penalties imposed under Section 78 and other provisions of the Finance Act, 1994. The appellant, engaged in processes like cutting, grinding, drilling, and machining of black forged wheels/axles supplied by M/s. Durgapur Steel Plant, argued that the processed goods were returned to the raw material supplier after machining. The Revenue contended that the appellant should have paid Service Tax on the processes carried out by them as Business Auxiliary Services. The Tribunal observed that the forged axles and wheels were received by the appellant for processing on a job work basis as per Rule 4(5)(a) of CENVAT Credit Rules, 2004. The appellant performed necessary processes as directed by the supplier and returned the goods for further processing to make them marketable. The Tribunal noted that the raw material supplier discharged excise duty on the finished goods. Consequently, the Tribunal found a prima facie case for total waiver of pre-deposit of dues adjudged, and thus, waived all dues and stayed recovery during the pendency of the appeal. The Stay Petition was allowed by the Tribunal.