Revenue's appeal on service tax liability for scrap separation rejected, no new product created

The appeal filed by the Revenue regarding the demand of service tax liability on the respondent for separating scrap at the premises of RINL under business auxiliary services was rejected. The 1st Appellate Authority found that no new product was created as a result of the activity, leading to the setting aside of the original order. The Tribunal upheld this decision, citing a previous case precedent. The impugned order was deemed legally sound and free from defects, resulting in the rejection of the Revenue's appeal.

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Issues:
Demand of service tax liability on the respondent under the category of business auxiliary services for the activity of separating scrap in the premises of RINL.

Analysis:
The appeal was filed by the Revenue against the order-in-appeal No. 23/2009(V-II) ST dated 31.07.2009. The issue revolved around the demand of service tax liability on the respondent for engaging in the activity of separating scrap at the premises of RINL under the category of business auxiliary services, specifically under the head "Production of goods on behalf of client." The Revenue argued that the segregation of scrap amounted to the production of goods on behalf of the client. However, the 1st Appellate Authority, after reviewing the factual matrix and the contract awarded to the respondent, concluded that no new product was created as a result of the activity, leading to the setting aside of the order-in-original.

It was noted that the issue had been previously addressed by the Tribunal in a similar case, Ferro Scrap Nigam Ltd Vs CCE Raipur [2014(36)STR 955(Tri-Del)], where the appeal of the appellant was allowed. In light of this precedent, the Tribunal in the present case found that the impugned order was legally sound and free from any defects. Consequently, the appeal filed by the Revenue was rejected. The judgment was pronounced and dictated in open court, affirming the decision to uphold the impugned order.

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