Manufacture on job work basis accepted prima facie, leading to waiver of pre-deposit and stay of recovery.

A prima facie case was accepted that the processing of black tea by chemical solvent extraction resulted in commercially different products, including separated caffeine returned to the supplier, and was therefore treated as manufacture of excisable goods on job work basis. On that basis, the tribunal considered the service tax demand to be arguable and found the cited precedent on mere slitting of tissue rolls inapplicable on the facts. Waiver of pre-deposit was granted and recovery of the dues was stayed pending disposal of the appeals.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery in view of the prima facie claim that the process undertaken on black tea amounted to manufacture and therefore no service tax was payable, alternatively whether Notification No. 8/2005-S.T. dated 01-03-2005 applied.

Analysis: The products emerging after the process were treated as prima facie commercially different from the black tea supplied by the other 100% EOU. The process was described as a chemical solvent extraction method, and caffeine also emerged as a separate product returned to the supplier. On that basis, the process was viewed as prima facie amounting to manufacture of excisable goods on job work basis. The cited precedent on mere slitting of tissue rolls was held inapplicable on the facts.

Conclusion: The appellant was granted waiver of pre-deposit and recovery of the dues was stayed till disposal of the appeals, in favour of the assessee.

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