Manufacturing activity at principal factory excluded from management, maintenance or repair service tax liability.

Operating and maintaining a plant within the principal manufacturer's factory for production of crumb rubber modified bitumen was treated as manufacture, not management, maintenance or repair service. The reliance on Notification No. 214/1986-CE was rejected because that notification applies to removal of goods without duty from a job worker's premises and had no application where the work was performed inside the principal manufacturer's factory. As the activity was manufacturing in nature, it fell outside service tax on management, maintenance or repair. The demand for service tax, interest, and penalties was held unsustainable.

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Issues: Whether the activity of operating and maintaining the Indian Oil Corporation plant amounted to job work involving manufacture, so as to fall outside management, maintenance or repair service and escape service tax liability.

Analysis: The appellants were engaged to operate a plant within the principal manufacturer's premises for production of crumb rubber modified bitumen, and the activity was accepted as amounting to manufacture. The reliance on non-availment of Notification No. 214/1986-CE was rejected because that notification concerns removal of goods without payment of duty from a job worker's premises and had no application where the work was done within the principal manufacturer's factory. Once the activity was found to be manufacturing in nature, it could not be treated as a taxable service of management, maintenance or repair.

Conclusion: The issue was decided in favour of the assessee. The demand of service tax, interest, and penalties was not sustainable.

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