2010 (1) TMI 204 - AT - Service Tax

Business Auxiliary Services- The appellant had undertaken the job work of manufacturing alcohol-based perfumes and pharmaceutical products for various input-suppliers. According to the appellant this activity stood excluded from the purview of business auxiliary service inasmuch as it amounts to manufacture under section 2(f) of the Central Excise Act. In the light of the decision of Rubicon Formulations (P.) Ltd. v. CC, CE&ST 2010 -TMI - 76121 - CESTAT MUMBAI held that- the activity undertaken by the appellant is excluded from the purview of business auxiliary service and the demand of service tax and penalties against the appellant are not sustainable. With this observation we set aside the impugned order and allow the appeal.

Summary

Issues Involved:
Appeal against confirmation of Service Tax demand under section 73 of the Finance Act, 1994 along with penalties and interest for job work of manufacturing alcohol-based perfumes and pharmaceutical products.

Analysis:

1. Service Tax Demand and Penalties:
The appellant filed an appeal against the order confirming the Service Tax demand under section 73 of the Finance Act, 1994, along with various penalties and interest. The appellant argued that the job work undertaken by them for manufacturing alcohol-based perfumes and pharmaceutical products should be excluded from the purview of "business auxiliary service" as it amounts to 'manufacture' under section 2(f) of the Central Excise Act. The appellant relied on a Board's Circular dated 27-10-2008 and a previous Tribunal judgment in the case of Rubicon Formulations (P.) Ltd. The Tribunal carefully considered the submissions and case law presented by the appellant. It was noted that the issue had already been settled by the Tribunal in the case of Rubicon Formulations (P.) Ltd., where it was held that the appellants are not liable for service tax on the activity in question. Consequently, the Tribunal found that the demand of service tax and penalties against the appellant were not sustainable.

2. Legal Position and Precedents:
The appellant's counsel argued that the activity of manufacturing alcohol-based perfumes and pharmaceutical products should be excluded from 'business auxiliary service' based on the legal position defined in the Central Excise Act. The counsel referred to a Board's Circular and a previous Tribunal judgment to support their argument. The Tribunal acknowledged the legal position and precedents cited by the appellant's counsel. It was observed that the issue had already been settled by the Tribunal in a previous case, which provided a clear precedent applicable to the present case. The Tribunal, after careful consideration, agreed with the appellant's argument that the activity undertaken fell outside the purview of 'business auxiliary service' and, therefore, set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the order confirming the Service Tax demand, penalties, and interest. The Tribunal held that the activity of manufacturing alcohol-based perfumes and pharmaceutical products undertaken by the appellant was excluded from the definition of 'business auxiliary service' based on the legal position and precedents cited. The Tribunal's decision was based on the settled issue as per the previous Tribunal judgment, providing relief to the appellant from the Service Tax demand and penalties.