2019 (5) TMI 226 - AT - Service Tax

Nature of activity - service or manufacture - Business Auxiliary services - job work activity done by the appellant who returned the goods to the 100% EOU - demand of service tax - HELD THAT - The issue whether the appellant is liable to pay service tax under the category of BAS for the job work activity done for 100% EOU has been analyzed by the Tribunal in the case of M/S. INTERPLEX ELECTRONICS INDIA PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, BANGALORE 2013 (5) TMI 451 - CESTAT BANGALORE where it was held that the process undertaken by the appellant amounts to manufacture and therefore they are not liable to pay service tax. Demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Demand of service tax for job work activity done for 100% EOU.

Analysis:

Issue 1: Demand of service tax for job work activity done for 100% EOU

The case involved the appellants who paid service tax on processes done to goods received from a 100% EOU from a certain date but failed to pay service tax for a previous period. The demand was raised by the department, contending that the final products manufactured and exported by the EOU were exempted by a specific notification, thus disqualifying the appellant from availing the benefit of another notification exempting service tax on job work. The Commissioner (Appeals) upheld the demand, leading to the current appeal. The appellant argued that the goods manufactured by the EOU were not unconditionally exempted, citing legal precedents that distinguish between goods exempted from duty and goods exported under bond without duty payment. The Tribunal analyzed the issue, focusing on the applicability of the exemption notification and the definition of "appropriate duty of excise." It was observed that the exemption under the relevant notification was not unconditional, as it required the goods not to be brought to any other place in India for the exemption to apply. Therefore, the appellant was found eligible for the exemption under the notification exempting service tax on job work, even if the process did not amount to manufacturing. The Tribunal referred to previous judgments supporting this interpretation. Additionally, the appellant highlighted a previous order by the Commissioner (Appeals) and a Tribunal decision that supported the appellant's position on the tax liability for processing goods on behalf of a 100% EOU. The Tribunal concluded that the demand for service tax could not be sustained, setting aside the impugned order and allowing the appeal with consequential relief as per the law.