2018 (9) TMI 390

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....sam Pursuant to investigation, it appeared that appellants had undertaken mechanical processing of sludge; that they had collected processing charges from their clients which was inclusive of service tax; that however they did not pay service tax so collected and also had not filed any ST-3 returns. It appeared that the services provided by appellants fell within the category of 'Business Auxiliary Service' requiring payment of service tax amounting to Rs. 1,89,90,583/- for the period October 2004 to March 2009. Accordingly, show cause notice dt. 22.04.2010 was issued to appellants inter alia, proposing demand of an amount of Rs. 1,89,90,583/- with interest thereon , appropriation of amount of Rs. 1,03,83,084/- paid by appellants during inv....

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....pplied by the client. In the present case, Appellant produces "CRUDE" using raw material "Oily Sludge" supplied by the Clients (CPCL/IOCL/BPCL). (ii) Goods so produced are returned back to the said client. In the present case, Appellant returns "CRUDE" to the Clients (CPCL/IOCL/BPCL). (iii) Such goods returned back to the said client is for use in or in relation to manufacture of other goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) on which appropriate duty of Excise is payable. In the present case, the clients (CPCL/IOCL/BPCL) pay Excise Duty under Chapter 27 of Central Excise Act, 1944 (against HS Codes 2710, 2711, 2712, 2713, 2714, 2503, 2901 & 2804) ....

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....ty is not disputed by them. In fact, they have remitted higher amount of Rs. 1,26,85,272/- to the exchequer. If the benefit of Notification No.08/2005-ST is given to them, their net liability will only be Rs. 1,23,29,064/- v) The entire dispute has arisen only on account of interpretation of bonafide belief that they were not required to pay the tax liability and on the confusion whether process carried out by them would be considered as 'Manufacture‛ or as a 'Business Auxiliary Service‛. 3. On the other hand, on behalf of the department, Ld. A.R Shri A.Cletus supports the impugned order. He submits that plea of extending benefit of Notification No.08/2005-ST was not raised during adjudication. So also, as per the appeal a....