2018 (4) TMI 1237 - AT - Service Tax

Services of re-rubberisation of rollers - whether the said activity would amount to manufacture or would be taxable under Management, Maintenance or Repair Service? - benefit of N/N. 14/2004 dated 10.9.2004 - Held that - The appellant is engaged in re-rubberisation of old and used rubberized roller for use in printing industry and therefore fully exempt by the said Notification - reliance placed in the case of M/s. Neotech Products Pvt. Ltd. Appellant (s) Versus CC5CE&ST, Hyderabad-IV 2016 (11) TMI 56 - CESTAT HYDERABAD - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activity of re-rubberisation of rollers amounts to manufacture under the Central Excise Act, 1944?
2. Whether the said activity is taxable under the category of 'Management, Maintenance or Repair Service'?
3. Whether the appellants are entitled to benefit from exemption under Notification No. 14/2004 dated 10.9.2004?
4. Whether the penalties imposed under sections 76 and 77 of the Act are justified?

Analysis:

1. The appellants were engaged in re-rubberisation of rollers for various industries, including the printing industry. The Department contended that this activity did not amount to manufacture under the Central Excise Act. The issue arose whether this activity falls under the definition of manufacture. The original authority confirmed the demand, interest, and penalties. However, the Tribunal, after considering relevant precedents, held that the demand was not legally sustainable. Therefore, the demand was set aside, and the appeal was allowed.

2. The appellants argued that the activity of re-rubberisation falls under Business Auxiliary Service as it involves the production or processing of goods for or on behalf of the client. They claimed entitlement to exemption under Notification No. 14/2004 dated 10.9.2004, which exempts taxable services related to printing from service tax. The Tribunal, after considering the submissions and relevant decisions, agreed with the appellants. The Tribunal found that the activity was entitled to the benefit of exemption and set aside the impugned order, allowing the appeal with consequential relief if any.

3. The issue of whether the appellants were entitled to benefit from the exemption under Notification No. 14/2004 dated 10.9.2004 was crucial. The Tribunal, after hearing both sides and considering relevant decisions, concluded that the demand was not legally sustainable. As a result, the impugned order was set aside, and the appeal was allowed with any consequential relief that may arise.

4. Regarding the penalties imposed under sections 76 and 77 of the Act, the Commissioner (Appeals) had set aside these penalties. The Tribunal did not find it necessary to reinstate these penalties, as the demand itself was found to be not legally sustainable. Therefore, the penalties under sections 76 and 77 remained set aside, and the appeal was allowed based on the above analysis.