2014 (1) TMI 1150 - AT - Service Tax

Stay application - Waiver of pre deposit - Held that - Undisputedly the applicant are manufacturing oral contraceptives on behalf of the principal M/s. Organon (India) Ltd. It is also not in dispute that the said goods are entirely processed in their factory and the same process would amount to manufacture within the definition of section 2(f) of Central Excise Act, 1944. This Tribunal in the case of Daurala Sugar Works (2008 (6) TMI 108 - CESTAT NEW DELHI) has allowed the stay application of the Applicant against demand of Service Tax under the category of Business Auxiliary Service, where the process of blending and bottling of Indian made foreign liquor, was held as amounting to manufacture - Stay granted.

Summary

Issues:
- Application for waiver of pre-deposit of Service Tax and penalties.
- Classification of activities as manufacture under Central Excise Act.
- Interpretation of exemption notifications for oral contraceptives.
- Comparison of judgments on similar cases.

Analysis:
1. The judgment deals with an application seeking waiver of pre-deposit of Service Tax and penalties totaling a significant amount. The applicant, engaged in manufacturing oral contraceptives, argued that their activities amount to manufacturing under the Central Excise Act, thus exempting them from Business Auxiliary Service classification. They relied on a previous tribunal judgment to support their claim and highlighted financial losses incurred.

2. The Revenue, represented by the Ld. A.R., contested the exemption claim, stating that the products cleared by the applicant to their principal were at nil rate of duty, thus not falling under the exemption notification. However, the Revenue could not provide any contradictory judgment to counter the applicant's reference.

3. The tribunal, after hearing both sides and examining the records, acknowledged that the applicant indeed manufactured oral contraceptives on behalf of their principal, meeting the definition of manufacture under the Central Excise Act. Citing a previous case involving blending and bottling of liquor, the tribunal found merit in the applicant's argument and granted a total waiver of pre-deposit of dues adjudged, staying the recovery during the appeal's pendency.

4. The judgment underscores the importance of establishing activities as manufacturing under relevant laws and interpreting exemption notifications accurately. It also emphasizes the significance of legal precedents in shaping decisions on similar cases, ensuring consistency and fairness in adjudication processes. The tribunal's decision to grant the waiver based on prima facie evidence reflects a balanced approach to addressing the applicant's claims while upholding legal principles and precedents.

5. Overall, the judgment provides a detailed analysis of the issues raised by the applicant and the Revenue, offering a reasoned decision based on legal interpretations, precedents, and the specific circumstances of the case. It serves as a valuable reference for future cases involving classification of activities, exemption notifications, and the application of legal principles in tax matters.