Retreading of worn-out tyres as manufacture supported prima facie waiver of pre-deposit and stay of service tax recovery.

Retreading of worn-out tyres was treated as a disputable activity for service tax purposes when the appellant claimed it amounted to manufacture under Heading 4012 of the tariff rather than Maintenance or Repair Service. The interim record noted that the relevant tariff entry had been introduced from 28.2.2005 and that prior appellate orders in similar matters supported the appellant's stand. On that basis, the appellant was held to have shown a prima facie case against the service tax demand, justifying interim protection. Waiver of pre-deposit was granted and recovery of the adjudged dues was stayed.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the service tax demand on retreading of worn-out tyres, having regard to the claim that the activity amounted to manufacture under Heading 4012 of the tariff.

Analysis: The demand related to retreading of worn-out tyres for the period April 2008 to March 2009 under the head of Maintenance or Repair Service. The tariff entry relied upon by the appellant was stated to have been introduced with effect from 28.2.2005, and prior appellate orders in similar matters supported the appellant's stand. On that basis, the appellant was found to have a resistible case against the impugned demand at the interim stage.

Outcome: Waiver of pre-deposit was granted and recovery of the adjudged dues was stayed.

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