Service tax on tyre retreading materials: exclusion of material value from the tax base was not accepted for total waiver of pre-deposit.

Retreading of used tyres was treated as taxable under Maintenance and Repair service, and the dispute centred on whether the value of rubber and other materials claimed to be sold separately could be excluded from the service tax base under Notification No. 12/03-ST. The Tribunal noted that the same exclusion issue had already been decided against the assessee in an earlier retreading matter and that a Larger Bench had likewise ed exclusion of material value on a similar principle. On that basis, complete waiver of pre-deposit was not established at the interim stage, and total waiver was declined.

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Issues: Whether the appellant was entitled to total waiver of pre-deposit by excluding the value of materials used in tyre retreading from the assessable value of service tax under the exemption notification.

Analysis: The activity of retreading used tyres was treated as taxable under Maintenance and Repair service. The only dispute was whether the value of rubber and other materials allegedly sold separately could be excluded from the service tax base under Notification No. 12/03-ST dated 20.06.2003. The Tribunal noted that the same issue had already been decided against the assessee in an earlier retreading matter and that a Larger Bench ruling had also rejected exclusion of material value on a similar principle. In that view, the appellant did not establish a case for complete waiver of the tax demand at the interim stage.

Conclusion: Total waiver of pre-deposit was declined. The appellant was directed to deposit Rs. 2 lakhs, and on such deposit the balance demand remained stayed during the pendency of the appeal.

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