2014 (1) TMI 771 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Job work - Business Auxiliary Service - Assembly of parts - Held that - appellant herein had received from M/s Mattel Toys (India) Pvt. Ltd., the parts of the Barbie Dolls as well as the Hot Wheel Kits, which they assembled in the factory premises. When the goods were cleared from the appellant s factory premises, they were complete product in the form of Barbie Dolls and Hot Wheel Kits. In our view, the said activity undertaken by the appellant, prima facie, would fall under the definition of manufacture under Section 2(f) of Central Excise Act, 1944. In view of the foregoing, the appellant has made out a prima facie case for waiver of the pre-deposit of the amounts involved - application for waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of Service Tax, interest, and penalties under Section 76 and 78 of Finance Act, 1994.

Analysis:
The appellant sought a waiver of pre-deposit of Service Tax, interest, and penalties amounting to Rs.28,69,419/-, confirmed by the adjudicating authority and upheld by the first appellate authority. The dispute arose from the classification of the appellant's activity related to the manufacturing process of 'Barbie Dolls' and 'Hot Wheel Kits'. The appellant argued that they used to discharge Central Excise duty on these goods before March 2006, considering them as manufactured goods. However, the Department confirmed Service Tax liability, contending that the appellant's activity did not amount to manufacture.

The appellant's counsel presented the manufacturing process of the toys, emphasizing that the goods received in an un-assembled form were assembled in the factory premises before clearance. The Department's representative argued that mere assembly does not constitute manufacture, citing precedents supporting this view. Upon evaluating the submissions, the Tribunal noted that the appellant received parts of the toys, assembled them in their factory, and cleared them as complete products. The Tribunal opined that this activity prima facie falls under the definition of manufacture as per Section 2(f) of the Central Excise Act, 1944. Consequently, the Tribunal found that the appellant established a prima facie case for the waiver of pre-deposit.

As a result, the Tribunal allowed the application for the waiver of pre-deposit of the balance amounts involved and stayed the recovery until the appeal's disposal. The decision was pronounced in court by the presiding judges, Mr. M.V. Ravindran and Mr. B.S.V. Murthy.