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of <h1>Tribunal grants waiver & stay, processes not manufacture, ruling in favor of appellants</h1> The Tribunal ruled in favor of the appellants, granting a waiver of predeposit and staying recovery during the appeal process. The issue revolved around ... Job Work - Activity Manufacture OR Not – levy of service tax or duty of excise - loss of original identity - conversion of pipes/tubes - Waiver of Pre-deposit - Held that:- For the period subsequent to 16/06/2005, the order of the Commissioner (Appeals) has attained finality since there is no challenge to the order of the Commissioner (Appeals) by both the sides that appellant is liable to pay service tax on the processes undertaken by them on job work basis for others - The challenge to the Commissioner (Appeals) order is only with regard to the period prior to 16/06/2005 - unless it is shown that the processes undertaken by the appellants when job work is done on the pipes are different from the situation when they undertake the processes on their own account, the Department cannot be said to have a prima facie case - the appellant has been able to make out a strong prima facie case in their favour for waiver - there shall be waiver of pre-deposit and stay against recovery during the pendency of appeal – stay granted. Issues:1. Whether the conversion of tubes by undertaking processes amounts to manufacture.2. Liability to pay excise duty on goods processed by the appellants.3. Interpretation of tariff classification for products used in drilling industries.4. Applicability of service tax on processes undertaken by the appellants.Analysis:1. The appellants purchase tubes and undertake processes like hardening, tempering, and upsetting to make them suitable for drilling industries. The Revenue contends that these processes amount to manufacture, requiring excise duty payment. An order confirmed duty of over Rs.6.77 crores for the period from April 2007 to March 2012, with penalties and interest imposed. The counsel argues that historical decisions and service tax payments support their position that the processes do not constitute manufacture. The Commissioner(Appeals) had ruled in favor of the appellants regarding service tax liability, which is now under challenge before the Tribunal.2. The AR argues that the issue of service tax is irrelevant, emphasizing the classification of products used in drilling industries under a separate tariff category. He asserts that the processes undertaken by the appellants transform the tubes into specialized products for drilling, thus constituting manufacture. Referring to Chapter 73 and a chapter note stating that coating is considered manufacture, the AR supports the position that the processes qualify as manufacturing activities.3. The counsel rebuts by highlighting that excise duty is discharged when coating is applied to the pipes. The Tribunal notes that the Commissioner(Appeals) order regarding service tax liability post-2005 remains unchallenged, indicating a prima facie case in favor of the appellants. Without evidence showing differences in processes between job work and self-accounted activities, the Department's case lacks strength. Consequently, the Tribunal grants a waiver of predeposit and stays recovery during the appeal process.
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