BUSINESS AUXILIARY SERVICE- MEANING OF MANUFACTURE

Court :
CESTAT, Mumbai Bench

Brief :
Section 65 of the Finance Act, 1994, read with section 2(f) of the Central Excise Act, 1944 - Business auxiliary services - Periods 10-9-2004 to 30-6-2006 and 1-7-2006 to 30-6-2007 - Stay order - Whether what is excluded from definition of ‘Business auxiliary services’ is ‘manufacture’ within meaning of 1944 Act which prima facie would mean that it is only manufacture of goods liable to Central Excise duty, which would stand excluded from purview of ‘Business auxiliary services’ - Held, yes - Under a contract entered into with a party, assessee produced for that party, goods of a particular brand and other products on which duty of excise was paid under Medicinal and Toilet Preparations Act, 1955 (MTP Act) - Commissioner held that said activities of assessee amounted to rendering ‘Business auxiliary services’ to that party, for which it was liable to pay service tax - Assessee’s case was that its activity amounted to ‘manufacture’ within meaning of section 2(f) of 1944 Act; that definition of ‘Business auxiliary services’ excludes said activity; and, therefore, it was not liable to pay service tax - Whether since assessee had paid excise duty on manufacture of goods in question under MTP Act and not under 1944 Act, exclusion clause of ‘Business auxiliary service’ was not applicable to instant case - Held, yes - Whether further, in view of facts that as per contract, assessee could not use those specifications/brand names to produce goods on its own account and also could not sell said branded goods in open market, it was apparent that assessee was producing goods for its client and was, thus, prima facie covered under ‘Business auxiliary service’ - Held, yes - Whether, therefore, assessee had not made out a strong case for complete waiver of pre-deposit of amounts demanded and it was to be directed to pre-deposit Rs. 50 lakhs and on such deposit, requirement to pre-deposit balance amount of service tax and penalties would stand waived - Held, yes [Paras 7 and 9] [Stay partly granted]

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