2016 (10) TMI 1391 - AT - Service Tax

Levy of Service tax - Technical Testing and Certification Services - payments made by the appellant to the USFDA - reverse charge mechanism - HELD THAT - Identical issue in respect of the appellant for the earlier period 18.4.2006 to 31.3.2008 was before the Tribunal in ROHA DYECHEM PVT LTD, VIDHI DYESTUFF MFG LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD 2016 (4) TMI 111 - CESTAT MUMBAI , the Bench held that such payments are not covered under the reverse charge mechanism as these are fees which are payable to USFDA. As in the case of the appellant itself in ROHA DYECHEM, this Bench has allowed the appeal and set aside the demands raised, respectfully following the same, it is held that the impugned orders are unsustainable and liable to be set aside - appeal allowed.

Summary

Issues involved:
1. Taxability of payments made to USFDA under Technical Testing and Certification Services.
2. Applicability of reverse charge mechanism on payments made to USFDA.

Analysis:

Issue 1: Taxability of payments made to USFDA under Technical Testing and Certification Services
The case involved appeals against an Order-in-Appeal passed by the Commissioner of Central Excise, Mumbai-II confirming demands, interest, and penalties on the appellant for receiving Technical Inspection and Certification Services from USFDA. The appellant had sent samples for inspection and analysis to USFDA for certifying product quality for export to the USA. The Revenue authorities contended that payments made by the appellant to USFDA were taxable under Technical Testing and Certification Services under the reverse charge mechanism.

Issue 2: Applicability of reverse charge mechanism on payments made to USFDA
The Tribunal referred to a previous case involving the same appellant for the period 18.4.2006 to 31.3.2008, where it was held that payments to USFDA are not covered under the reverse charge mechanism as they constitute fees payable to USFDA. Citing the previous order dated 11.2.2016, the Tribunal found that the payments made by the appellant to USFDA were not taxable under the reverse charge mechanism. Consequently, the Tribunal set aside the demands raised by the Revenue authorities and allowed the appeals in favor of the appellant.

In conclusion, the Tribunal held that the payments made to USFDA by the appellant for Technical Inspection and Certification Services were not taxable under the reverse charge mechanism. Therefore, the impugned orders confirming demands, interest, and penalties were deemed unsustainable and were set aside. The appeals were allowed in favor of the appellant, following the precedent established in a previous case involving the same issue.