Custom, Excise & Service Tax Tribunal
Cce, Noida vs Free Scale Semiconductors India ... on 12 June, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Court No.III
Appeal No. E/2274/2009-SM
(Arising out of OIA No.130/CE/APPL/Noida/2009 dt.14.5.09 passed by Commissioner of CCE (Appeals), Noida))
Date of Hearing/Decision: 12.06.2015
For approval & Signature:
Honble Smt.Sulekha Beevi C.S., Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
CCE, Noida Appellant
Vs.
Free Scale Semiconductors India Pvt.Ltd. Respondent
Appearance:
Present for the Appellant: Shri M.R.Sharma, AR Present for the Respondent: Shri Karan Sachdev, Advocate Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial) Final Order No.51954/2015 Per: Sulekha Beevi C.S. The Revenue has filed this appeal challenging order of refund of cenvat credit of Rs.21,20,532/-.
2. The respondent is a 100% EOU and engaged in the business of processing of chips, the activity which includes circuit designing, testing, validation of such chips, integration of software on chips and support services for its parent company viz.,M/s.Free Scale Semiconductors Inc.USA. The respondent filed an application for refund of Cenvat Credit as the services exported are covered under the definition of Business Auxiliary Service as defined in Section 65 (19) of the Finance Act.1994. It is not in dispute that the respondents have registered for providing the said services with the service tax authority. According to the Revenue the activity of the respondent would fall under the definition of manufacture as defined in section 2(f) of Central Excise Act, 1944.
3. Learned Counsel appearing for the respondent submits that the said activity is not a manufacturing activity. He explained that the activity undertaken in processing of chips involved conceptualization of new product, designing chips, testing and validation of chips and customer support after sales. Conceptualization of semi conductor chip takes place based on feedback and requirement of the customer which is designed according to the customers need. The respondent then conducts testing and validation of chips and also provide after sale support. According to him, this would come within the definition of Business Auxiliary Service. The definition of Business Auxiliary Service as defined in Section 65 (19) of the Finance Act.1994 is as under:-
Section 65 (19) business auxiliary servicemeans any service in relation to-
(i) Promotion or marketing or sale of goods produced or provided by or belonging to the client: or
(ii) Promotion or marketing of service provided by the client; or Explanation. For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of chance, organized, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo;
(iii) any customer care service provided on behalf of the client; or
(iv) Procurement of goods or services, which are inputs for the client; or Explanation. For the removal of doubts, it hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client;] [(v) Production or processing of goods for, or on behalf of, the client;
(vi) provision of service on behalf of the client; or
(vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture within the meaning of clause (f) of section 2 of the Central Excise Act, 1944 ((1 of 1944).
4. On analyzing the definition of Business Auxiliary Service, on the factual backdrop of the explanation of the activity undertaken by the respondent, it reveals that it would come within the definition of Business Auxiliary Service under Section 65 (19) of the Finance Act.1994. Learned Counsel for the respondent also relied upon the decision of Tribunal in CC, Hyderabad vs .Knoah Solutions Pvt.Ltd.-2010 (20) STR 691 (Tri.-Bang.). The contention of the Revenue that the activity of processing of chips is a manufacturing process and that it would fall within the definition of manufacture as under section 2(f) of Central Excise Act, 1944 does not find merit at all. The services provided by respondents for their parent company is designing the new semiconductor chip which has been conceptualized, after conduct of testing and validation, it is exported for further processing to parent company and respondents provide after sales support. The authorities below have relied upon the report dated 17.11.08 which was based on observation of the activity after visit to the premises of the respondent.
5. I, therefore, find no ground to interfere with the concurrent findings arrived at by adjudicating authority as well as the appellate authority. The appeal filed by the Revenue is dismissed.
(dictated & pronounced in open court)
(Sulekha Beevi C.S.) Member (Judicial)
mk
Sub-clause (iii) of Clause (19) of section 65 of Finance Act, 1994 stipulates that any customer care service provided on behalf of the client as well as sub-clause (v) provides production or processing of goods for, or on behalf, the client. 1