2020 (2) TMI 754 - AT - Service Tax

Nature of activity - manufacture or service - Activity amounting to manufacture or not - process of re-treading of old tyres supplied by the principal on the job work basis - demand of service tax on process of re-trading under the head of Maintenance or Repairs - HELD THAT - The appellant have raised the issue that they are manufacturing re-treaded tyres falling under Heading 4012 of Central Excise Tariff Act 1985 - it can be seen that the Commissioner (Appeals) contended that they were providing service of re-treaded tyres and not manufacturing re-treaded tyres - this contention for the reason that there cannot be any other process for manufacture of re-treaded tyres except re-treading of old and used tyres which the appellant has carried out, therefore, there is absolutely no dispute that the appellant have manufactured re-treaded tyres filing under Chapter heading 4012 of Central Excise Tariff Act, 1985. Since the activity of appellant is amount to manufacture, it is a subject matter of Central Excise and will not leviable to service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the process of re-treading old tyres amounts to manufacturing re-treaded tyres under Chapter Heading 4012, thereby exempting it from service tax?
2. Whether the appellant is liable to pay service tax under the category of "Maintenance or Repairs Service" for providing the service of re-treading old tyres?

Analysis:
1. The appellant contended that their activity of re-treading old tyres amounts to manufacturing re-treaded tyres falling under Chapter Heading 4012 of the Central Excise Tariff Act 1985. They argued that since re-treaded tyres are manufactured only on old and used tyres through the re-treading process, it should not attract service tax. The appellant also cited the resolution of a Larger Bench in a previous case to support their argument regarding the interpretation of law on the issue of determining the value of goods supplied by the principal. They emphasized that the extended period for invoking the demand is beyond the normal period and should be considered time-barred. The appellant presented various judgments in support of their position.

2. The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order, which stated that the appellant was providing the service of re-treading old tyres and not manufacturing re-treaded tyres. The Commissioner (Appeals) had concluded that the appellant should pay service tax under the category of "Maintenance or Repairs Service" for the re-treading service provided.

3. Upon considering the submissions from both sides and examining the records, the Tribunal found that the appellant's activity of re-treading old tyres indeed amounted to manufacturing re-treaded tyres falling under Chapter Heading 4012 of the Central Excise Tariff Act 1985. The Tribunal disagreed with the Commissioner (Appeals) regarding the characterization of the appellant's activity as a service rather than manufacturing. Since the appellant's activity constituted manufacturing, it was deemed subject to Central Excise duty and not liable to service tax. Consequently, the demand for service tax was set aside, and the appeal was allowed.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD highlights the key issues, arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant laws and precedents.