2024 (1) TMI 1481

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....he customers. The retreading process requires use of certain raw materials like tread rubber, tread bonding solutions, bonding gum blocks, consumables, etc. The appellant is also registered with the Sales Tax/VAT authorities for payment of Sales Tax/VAT on use of such raw materials for carrying out the activities of re-treading of tyres. The appellant had discharged the Service Tax liability on the labour component up to the period July 2007, and subsequently had not paid any Service tax on the labour component, owing to the reason that they were under the threshold exemption limit for non-payment of service tax. Since the appellant were under the Service tax net and were not entitled for the benefit of SSI exemption, started paying service....

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.....2003 shall not be available to the appellant. Since, the authorities below have not specifically alleged that the appellant did not maintain the records, demonstrating use of the raw materials for carrying out the activities of retreading the tyres, in our considered view, the exemption benefit provided under the said Notification No.12/2003-ST dated 20.06.2003 should be available to the appellant. Further, we also find that the issue arising out of present dispute is no more res-integra in view of the judgement of Hon'ble Supreme Court in the case of Safety Retreading Co.(P) Ltd. Vs Commissioner of C. Ex. Salem - 2017 (48) S.T.R. 97 (S.C.). The relevant paragraphs of the said judgement are extracted herein below: "10. The exigibility of....

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.... been advanced by Ms. Pinky Anand, learned Additional Solicitor General that there is no evidence forthcoming from the side of the assessee that the value of the goods or the parts used in the contract and sold to the customer amounts to seventy per cent (70%) of the value of the service rendered which is the taxable component under the State Act. The aforesaid argument overlooks certain basic features of the case, namely, the undisputed assessment of the assessee under the local Act; the case projected by the Department itself in the show cause notice; and thirdly the affidavit filed before this Court by one S. Subramanian, Commissioner of Central Excise, Salem. 12. No dispute has been raised with regard to the assessment of the appellan....

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....ur component after deducting 70% towards material cost on the gross tyre Retreading charges billed and received for the period from 16-6-2005. In short, they have paid service tax only on the 30% of the tyre Retreading charges received from the customers, by conveniently omitting 70% of the consideration received towards Retreading charges to avoid tax burden. The verification of invoices of the Appellant for the period from Jan.-2007 to March-2007, the officers noticed that the Appellant have shown material cost, patch cost and misc. charges i.e. Labour charges separately in their invoices. However, on the follow up action the customers of the Appellant revealed that they have neither purchased nor received raw materials intended for Ret....