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2019 (2) TMI 766 - AT - Service TaxClassification of services - Business Auxiliary Service or not - job of processing and recovery of iron and steel scrap supplied - period of dispute i.e. 01.03.2005 to 31.01.2008 - Held that - An identical issue in respect of the appellant s other unit which carried the activity at M/s SAIL (Bhilai Steel Plant) came before the Delhi Bench of the Tribunal in the case of M/S FERRO SCRAP NIGAM LIMITED VERSUS CCE, RAIPUR 2014 (1) TMI 1049 - CESTAT NEW DELHI . The Tribunal held that there was no liability for payment of service tax upto 16.06.2005 on such activity. Liability for the period w.e.f.16.06.2005 - benefit of N/N. 8/2005-ST dated 01.03.2005 - Held that - The activities carried out by the appellant for BSP is in the nature of processing. It is evident from the record that the appellant was required to recover of iron steel scrap from various stages of manufacture and the collected scrap was to be returned to BSP, but the benefit was denied to the appellant by taking the view that such scrap cannot be covered by expression of raw materials or semi-finished goods . But such a view is not called for. The scrap is nothing, but a raw material for use in melting and further manufacture within the iron and steel plant - Giving due consideration to such end-use Certificate submitted by the Public Sector Undertaking, the appellant will be entitled to the benefit of N/N. 8/2005 dated 01.03.2005. Appeal allowed - decided in favor of appellant.
Issues:
1. Interpretation of Business Auxiliary Service for processing and recovery of iron and steel scrap. 2. Applicability of Notification No.8/2005-ST dated 01.03.2005 for exemption from service tax. 3. Consideration of the second limb condition of the Notification for service tax liability. Analysis: Issue 1 - Interpretation of Business Auxiliary Service: The appellant entered into an agreement with a steel plant for processing and recovering iron and steel scrap, leading to a dispute on service tax liability under the category of Business Auxiliary Service. The Department argued for service tax payment, citing the Finance Act, 1994. The appellant contested, referring to a Tribunal decision on a similar case. The Tribunal noted the exemption from service tax for the period before 16.06.2005 based on the definition of Business Auxiliary Service. For the subsequent period, the definition included processing of goods, leading to a detailed examination of the activities carried out by the appellant. Issue 2 - Applicability of Notification No.8/2005-ST: The lower appellate authority denied the benefit of Notification No.8/2005-ST to the appellant, stating that the scrap generated cannot be considered raw materials or semi-finished goods as required by the Notification. The appellant argued for the benefit of the Notification, emphasizing the return of processed goods to the client for use in manufacturing dutiable steel products. The Tribunal analyzed the Notification's conditions and the appellant's activities, ultimately granting the benefit of the Notification and setting aside the service tax demand. Issue 3 - Second Limb Condition of the Notification: The Revenue raised doubts about the fulfillment of the second limb condition of the Notification, concerning the return and use of processed goods in manufacturing dutiable goods. The appellant presented a certificate from the steel plant confirming the return and use of the processed scrap. Considering the certificate as evidence, the Tribunal concluded that the appellant met the Notification's conditions, leading to the allowance of the appeal and the dismissal of the service tax demand. In conclusion, the Tribunal's judgment favored the appellant by interpreting the Business Auxiliary Service, applying the Notification for exemption from service tax, and confirming the fulfillment of conditions for the benefit of the Notification, ultimately setting aside the service tax demand.
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