TaxTMI 
TaxTMI 
2018 (5) TMI 322
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.... sold in USA are to be recognized/certified by USFDA and in case of USFDA ANDA holder manufacturing a product which is intended to be got manufactured from any other site or country (in the case of the appellant it is Goa factory) for sale in US market, then before commencing the commercial production of such goods in such other site/country, it is necessary that the ANDA holder in USA shows to the satisfaction of USFDA authorities that the particular product can be manufactured at that new location by complying with the same standards of quality, stability and safety. Thereafter the ANDA holder gets the consent for manufacturing the same in new facilities and the commercial production of such goods can be commenced only after such amendment to existing ANDA. The entire activity is called as "Site Transfer Activity". In technical terms it is called as "Tech Transfer Activity". The following steps are undertaken: * Developing the product based on technology pack provided by Watson USA * Trial batches are produced for new product, Exhibit batches are taken up upon successful completion of the trial or pre exhibit batches, * Test and observe the batches for quality and stability....
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....ss Auxiliary Services. * The services of Technical Testing of the product such as studying how the product behaves at each stage, finalizing critical parameters towards quality control testing, etc before the final product can be undertaken for manufacture are fully performed in India and therefore the same cannot be treated as export of services. Aggrieved by the said impugned order the appellant has filed the present appeal. 2. Heard both sides and perused the records. 3. Learned consultant for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the rebate claim has been rejected merely on technical ground. He further submitted that the Site Transfer Activity cannot be treated as "Technical Testing and Analysis Service" since the same does not possess the characteristics of Testing activity. Thereafter the learned consultant referred to the definition and meaning of "Technical Testing or Analysis Service" which is defined in Section 65(105) (zzh) and the same is reproduced herein below: "The term "Technical testing and Analysis" is defined in Se....
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....ers the services of \production or processing of goods for or on behalf of the client'. 3.2. The learned consultant further submitted that even assuming without admitting that the services are classifiable under Technical Testing and Analysis Services yet it is export of service. He further submitted that the Technical Testing and Analysis Service falls under second category 3(1)(ii) and the criteria is that this service must be performed partially outside India and in this case the testing of the samples has taken place entirely in India and the debit note raised by the appellant on Watson USA states that "Our charges in consideration for expenses incurred in preparation for the manufacture of product for Watson Laboratories Inc and Research and Development for Watson Laboratories Inc" but the test results have been communicated to the US Regulatory Authorities. The learned counsel further submitted that the Commissioner (Appeals) in the impugned order has observed that the appellants themselves have declared and classified the services under Technical Testing and Analysis Service till the time of filing the ST-3 Return and now the appellants had taken a turn around and claim....
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.... Technical Consultancy Service." He further submitted that in this case testing of the samples has taken place entirely in India and no activity has been carried outside India and therefore it does not fall in the category of "Export of Service". 5. After considering the submissions of both the parties and perusal of the record, we find that the nature of the function carried out by the appellant is a Site Transfer Activity which has been done for Watson USA for obtaining permission to manufacture the goods in India. We also find that Site Transfer activities involved providing of space which are required to be taken and which includes developing the product based on technology pack provided by Watson USA, Trial batches are produced for new product. Exhibit batches are taken up upon successful completion of the trial or pre exhibit batches are subject to test for quality and stability, which is required as per US FDA to get an approval and the same are sent to USA for approval with report. Further we find that the activity of Site Transfer involves production or processing of goods not amounting to manufacture and therefore the same were taxable under the category of "Busine....