Prima facie manufacture claim rejected at stay stage, with only partial pre-deposit granted in service tax dispute.

The article concerns interim relief in a service tax dispute over rethreading worn-out dies. The appellant argued that the activity amounted to manufacture under Note 6 to Section XVI of the First Schedule to the Central Excise Tariff Act, 1985 and was therefore outside service tax. That prima facie contention was not found sufficiently established at the stay stage. The appellant's small scale industry status was nevertheless considered in granting interim relief. Complete waiver of pre-deposit was refused, and partial relief was granted by directing a pre-deposit of Rs. 3,00,000 within six weeks.

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Issues: Whether the appellant made out a prima facie case for complete waiver of pre-deposit and stay of recovery of the service tax demand, and whether partial pre-deposit should be ordered.

Analysis: The appellant relied on Note 6 to Section XVI of the First Schedule to the Central Excise Tariff Act, 1985 to contend that the activity of rethreading worn-out dies amounted to manufacture and, therefore, was not liable to service tax. The claimed applicability of the section note was examined against the nature of the activity and was not found to be sufficiently made out at the prima facie stage. At the same time, the appellant's status as a small scale industry unit was taken into account while considering interim relief.

Conclusion: Complete waiver of pre-deposit was declined, and only partial relief was granted by directing pre-deposit of Rs. 3,00,000 within six weeks.

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