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2021 (2) TMI 704 - Commissioner - Service TaxNature of activity - service or manufacturing? - Design Services or not - allegation is that appellant failed to pay service tax on gross amount received by them by way of suppressing the value of services willfully with intent to evade payment of Service Tax - contravention of provisions of Section 68,69 & 70 of the Finance Act 1994, as amended read with Rules 4,6 & 7 of the Service Tax Rules 1994 - HELD THAT:- It is on records that the designs/ drawings of the die/moulds etc. (tooling for manufacturing final Products) are being provided by the overseas buyers of the appellants and upon manufacturing of said tooling kits the appellants have realized charges from their overseas buyers. From the foregoing, it transpires that, the appellants have, in fact not designed the tooling kits or made drawings for the same. They have only manufactured the tooling kits as per the drawings provided by their overseas buyers and the same tolling kit is thereafter used for the manufacture of dutiable forgings which are to be sold to the same overseas buyers. The prime activity of the appellants is manufacturing and as per the agreement/contract/ purchase order, they have to manufacture goods only as per the specification of their buyers and the design of the said goods is also very specific. To meet out the requirements of their buyer they first manufacture the tooling kit for the production of goods and they charge the manufacturing cost of the tooling kit in the head of "Die design & preparation charges". From the records it appears that, the appellants themselves not design the said tooling kit but they only manufacture the same on the basis of drawings provided by their customers. Further, it is found that the period of demand starts from 2014-15 onwards, whereas, prior to 01.07.2012 the classification was being done as per the provisions of Section 65A read with Section 65(105} of the Finance Act, 1994. However, the earlier method of classification was done away w.e.f, 01.07.2012 and negative list regime has came in to existence wherein service has been defined as any activity for consideration (Section 65B of the Act) and there remains no categorization of service. All the activities for consideration were held to be service except those which specifically mentioned in the "negative list" in terms of Section 66D of the Finance Act - classification of the impugned activities had been done under earlier Section 65(105)(zzzzd) of the Finance Act, 1994 read with Section 65A of the Act. Whereas, the said statute has lost its existence w.e.f, 01.07.2012 and in absence of proper legal backing, the classification done in the instant cases for the period from 2014-15 onwards and demand of service tax thereof cannot be held as legal and proper. The impugned activities cannot be termed as "service" rather manufacturing. Hence, the demand of service tax in the instant cases does not sustain - Appeal allowed - decided in favor of appellant.
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