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ST - Supply of (DMF)/(TECHPACK) to customers - since assessee is manufacturer of excisable goods, they cannot be treated as provider of Scientific or Technical Consultancy service: CESTAT

 

By TIOL News Service

MUMBAI, MAR 19, 2018: THIS is a Revenue appeal.

The respondent assessee manufactures Bulk Drugs. During the scrutiny of the appellants' documents the Central Excise officers observed that the appellants had supplied the Drug Master File (DMF)/Technical Package (TECHPACK) to various customers.

It was the case of the Revenue that said activity is covered as ‘Scientific or Technical Consultancy' service under the Finance Act, 1994 and, accordingly SCN was issued demanding service tax of Rs.9,50,378/-; which was confirmed along with interest and penalty.

The Commissioner(Appeals) agreed with the submission of the assessee that they are manufacturers of excisable goods and not any Scientist or Technocrat or any science of technology institutes and hence they cannot be treated as provider of scientific or technical consultancy service.

Aggrieved with this order, Revenue is before the CESTAT and submits that the assessee has rendered the services of technical assistance relating to manufacture/testing of drugs to their customers who have paid money to obtain these DMF/TECHPACK; that the customers of the assessee have invested huge sums in purchase of the DMF/TECHPACK which is nothing but information/data relating to the manufacture of bulk drugs or pharmaceutical or any other products provided as per the customer's specification; that the impugned order should be set aside and the demand should be confirmed.

After considering the submissions, the Bench observed that there is no infirmity in the impugned order inasmuch as the Revenue had misinterpreted the statutory definition of ‘Scientific or Technical Consultancy' as provided u/s 65(92) of the FA, 1994.

The Bench further observed that - the activities of the assessee do not fall under the provisions of Service Tax. The assessee is a manufacturer of excisable goods and they are not Scientist or Technocrat or any science or technology institute. Therefore, the service rendered by them cannot be treated as provider of scientific or technical consultancy.

Noting that the Commissioner(A) had also rightly considered the decisions in Steel Cast Ltd. - 2009-TIOL-25-CESTAT-AHM & Administrative Staff College of India - 2008-TIOL-2007-CESTAT-BANG while dropping the order of the original authority, the impugned order was upheld and the Revenue appeal was dismissed.

(See 2018-TIOL-857-CESTAT-MUM)


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