2012 (4) TMI 219

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....o their own manufacturing activity, they were also manufacturing polyethylene coating on the ERW steel pipes sent to them by M/s. GAIL and M/s. Gujarat Gas Co. Ltd. 2. Inasmuch as the activity of polyethylene coating on pipes sent by the customers does not amount to manufacture, the appellants were liable to pay service tax on the said activity under the category of "business auxiliary services". The service tax was discharged by them by taking into account the value of the bare pipe sent by them to the customers. 3. Inasmuch as in terms of section 67 of Finance Act, the appellants are required to discharge their service tax liability on consideration received for the services provided, they filed refund claim of Rs. 1,10,88,426/- rel....

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....hand that they would be eligible for credit in respect of pipes as inputs and on the other hand for payment of service tax value should not be taken into account and they are eligible for refund. Even though CCE Indore has taken a view that the credit taken by the appellants in respect of the pipes is correct and therefore dropped the proceedings, I am of the view that merely because coating activity was carried out on the pipes, and service charges were collected with reference to the coating activity carried out as the pipes were supplied by the concerned parties, the bare pipes cannot be considered as inputs for the purpose of the service activity carried out by them. Therefore, the credit taken by the appellants appears to be irregular.....

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....or providing services and cost of pipes was not required to be included while discharging service tax liability. However, he has rejected the refund claim on the ground that the appellants have already availed Modvat credit of duty paid on the pipes and proceeding to propose disallowance of such credit were dropped on the ground that the value of the pipes (inputs) stands included in the value of the services. Accordingly, he has observed that the appellants cannot seek double benefit i.e. availment of Modvat credit of duty paid on the pipes as well as not including the value of the pipes in the value of the services to be provided by them. 6. After hearing both sides, we agree with the reasoning adopted by the Commissioner (Appeals). Ad....