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2023 (6) TMI 899 - AT - Service TaxJob Work - Exemption to taxable service of production of goods on and for behalf of a client under N/N. 08/2005-ST dated 01.03.2005 - benefit denied on the ground that Excise Duty has neither been paid by the appellant (job worker) nor by the client (principal) - conversion charges received from M/s. Organon (India) Ltd. for undertaking manufacture of oral contraceptive medicines under the brand names- Novelon , Femilon , Elogen , etc. HELD THAT - The appellant is engaged in manufacturing of pharmaceuticals products is not disputed by the revenue. As these fact is not disputed by the Revenue, the case of the appellant is squarely covered by the CBEC Circular vide Letter Dy. No. 2305/Commr(ST)/2011, dated 15-7-2011 where it was held that said notification can be applicable only in cases where the activity of the service provider does not amount to manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944. As the appellant is manufacturer of the goods, the demand of Service Tax is not sustainable against the appellant under the category of Business Auxiliary Service . Same view was taken up by this Tribunal in the case of SAMRAJYAA AND COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE 2018 (10) TMI 34 - CESTAT CHENNAI where it was held that the activities carried out by the appellant will indeed amount to manufacture for the purpose of Section 2(f) of the Central Excise Act,1994 and in consequence, the same will not be a Business Auxiliary Service under Section 65 (19) of the Finance Act, 1994 and therefore no service tax liability will arise in consequence. This being so, the impugned orders confirming demand of service tax under Business Auxiliary Service cannot then sustain and will require to be set aside As the appellant is the manufacturer of the pharmaceutical goods, demand of Service Tax is not sustainable - the impugned demand is set aside and the appeal is allowed.
Issues involved:
The issue involves whether the appellant, engaged in the manufacturing of pharmaceutical products, is liable to pay service tax under the category of 'Business Auxiliary Services' for receiving conversion charges from a client for manufacturing excisable goods exempted from central excise duty. Summary: Issue 1: Liability of the appellant to pay service tax under 'Business Auxiliary Services' category The Department contended that since neither the appellant nor the client had paid excise duty, the appellant was not entitled to avail benefits under Service Tax Exemption Notification No. 08/2005-ST. Proceedings were initiated to demand service tax for the period April 2005 to March 2006. Decision: The Tribunal found that the appellant, being a manufacturer of pharmaceutical goods, was not liable to pay service tax under 'Business Auxiliary Services' as the manufacturing activity did not fall under the purview of BAS. The CBEC Circular and a previous Tribunal case supported this view, leading to the setting aside of the demand and allowing the appeal with consequential relief. Key Points: - The appellant received conversion charges for manufacturing excisable goods exempted from central excise duty. - Department claimed appellant was liable for service tax under 'Business Auxiliary Services' due to non-payment of excise duty by both appellant and client. - Tribunal found appellant's manufacturing activity not covered under BAS, citing CBEC Circular and previous Tribunal case. - Demand for service tax was set aside, and the appeal was allowed with consequential relief.
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