9911796707
TMI Blog2007 (9) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc., for industrial use falling under Chapter 84 of the Central Excise Tariff Act, 1985. The appellants are also registered under service tax for providing services under the five categories viz., Consulting Engineering, Installation and Commissioning, Repairs and Maintenance, Technical Testing and Analysis, Franchise Service. 2. During the scrutiny of their records, the CERA auditors observed that the appellants are also engaged in the business of Leasing and Hire Purchase of some equipments from 16-7-2001 onwards and have received lease receipts / financial charges for providing these services. This service appeared to be covered as taxable service under the category of '"Banking and other Financial Services" as per Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants contended that they are primarily engaged in the activity of manufacturing of industrial boilers, etc. However, in stray cases, they had occasion to supply their own boilers on lease contract. In these cases, they have not charged any amounts on account of management fee, processing fees or documentation charges, etc., the way professional finance institutes charge, but interest was charged on unpaid amount of credit. Their contention is that this interest cannot be equated with the interest that is generally charged from the buyers by the professional financial institutes. Therefore, such interest amount is not in terms of the services rendered by them. They refer to clause (viii) of Explanation 1 to Section 67 as inserted by Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional in leasing business for any other products, which are manufactured by other companies. The appellants' prime business activity is of manufacturing hi-tech boilers, Pollution Control Equipments, etc., which are high value capital goods for industrial uses. 7. The lower authorities confirmed the service tax demand of Rs. 1,35,189/- for the period from 16-8-2002 to 31-3-2004 on the ground that as per Section 65(105)(zm) of the Finance Act, 1994 'any service provided to customer by any other body corporate' in relation to 'Banking and other Financial Services' is a taxable service w.e.f. 16-8-2002. 'Banking and other Finance Services' are defined in Section 65(12) of the Act. 'Financial leasing serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money by one who is entitled its use. Interest cannot be considered as consideration for rendering any service. In any case, Clause (viii) of Explanation 1 to Section 67 inserted by Finance (No. 2) Act, 2004 now specifically provides that 'interest on loan' will not form part of the values of taxable service. In this context, it has been clarified by the Ministry vide Circular No. 80/10/2004-ST dated 17-9-2004 that 'all such interests which are in the nature of interests on loans would thus remain excluded from the taxable -value.' In our view, the insertion of the explanation has removed the anomaly that existed earlier and it should be treated as clarificatory in nature i.e., effective from 16-8-2002. In that view of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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