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2019 (1) TMI 1119 - AT - Service TaxDemand of service tax - job work - change of the valuation under Central Excise to MRP based valuation - manufacture of pharmaceuticals - inclusion of testing charges in assessable value - extended period of limitation - Held that:- As long as the pharmaceuticals were not under MRP based valuation, the excise duty was paid by the appellant reckoning the processing charges including the testing and analysis charges. Since, the pharmaceuticals are now under MRP based valuation, the amounts which they received under the two heads is irrelevant. The question is whether because of change of the valuation under Central Excise to MRP based valuation, the activity of testing and analysis which was hitherto considered by the appellant as a part of their manufacturing costs and which has not been disputed by the department becomes a distinct service rendered to their principals. We find it difficult to hold such a view - The testing and analysis is not a distinct separate service being offered by the appellant to their principals but it is a part and parcel of the manufacturing process. Unless such testing including stability tests and validation tests are conducted the product cannot be marketed at all. Therefore, no service tax can be leviable separately on this component of the processing charges which they received. On identical facts in the case of Midas Care Pharmaceuticals Pvt Ltd [2014 (8) TMI 743 - CESTAT MUMBAI], the Tribunal-Mumbai held that no service tax can be levied under testing and analysis charges where the pharmaceuticals are tested by the appellant after being manufactured as a job work. Appeal allowed - decided in favor of appellant.
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