Manufacturer not liable for service tax on installation of weighing machines due to manufacturing nature of activity

The Tribunal held that the appellant, a manufacturer of weighing scales/machines, should not be liable to pay service tax on the activity of installation or commissioning of weighing machines. The Tribunal found that since the appellant did not charge separately for installation, paid Central Excise duty on the total value, and did not claim deductions for installation, the activities should be considered as manufacturing, not taxable services. The demands for service tax raised on the appellant were deemed invalid, and the appeals were allowed in favor of the appellant.

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Issues:
1. Whether the activity of installation of weighing scales/machines at the customer's premises should be considered as a taxable service for the purpose of levy of service taxRs.
2. Whether the demands for service tax raised on the appellant are validRs.
3. Whether the appellant should be liable to pay service tax on the activity of installation or commissioning of weighing machinesRs.

Analysis:
1. The appellant, engaged in manufacturing weighing scales/machines, got registered for Central Excise duty and service tax. The department alleged that installation of machines at customer sites should be a taxable service. The department issued show cause notices (SCNs) invoking the extended period of limitation. The first SCN alleged the appellant was liable to pay service tax on installation or commissioning, without a separate price breakup for installation. The second SCN alleged suppression of facts. The demands were confirmed by the department.

2. The appellant contended they did not perform installation services or charge separately for it. They argued that since they discharged Central Excise duty on the entire machine value, the activities should be considered as manufacturing, not taxable services. The appellant cited relevant judgments to support their case. The Revenue supported the demands made in the impugned orders.

3. The Tribunal found the appellant did not charge separately for installation, had paid Central Excise duty on the complete value, and did not claim deductions for installation. As the appellant had already paid Central Excise duty on the total value, they could not be taxed under service tax provisions. The Tribunal referred to judgments where similar cases were decided in favor of the assessee. Based on these findings and case laws, the Tribunal concluded that the demands for service tax were not valid. The impugned orders were set aside, and the appeals were allowed in favor of the appellant.

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