By the Court.—The appeal arises from a decision of the Customs, Excise & Service Tax Appellate Tribunal dated 21 February 2014.

2. The Revenue which is in appeal has sought to raise the following question of law:

“Whether the CESTAT has erred in holding that Service tax is not required to be paid on goods used in the repairing process on which Excise duty and VAT has been paid on the value of the said goods, ignoring the fact that as per the contract the respondents were under an obligation to replace the damaged parts and to maintain the transformers in a proper working condition.”

The assessee is engaged in the manufacture of electrical transformers. The assessee had entered into a contract with M/s. Dakshinanchal Vidyut Vitran Nigam Ltd., Agra and M/s. U.P. Power Corporation Ltd., Lucknow for repair and maintenance of transformers. The assessee was duly registered and was discharging its service tax liability under the service head ‘Management, Maintenance and Repair’. The liability on account of service tax was discharged in respect of the labour charges recovered by the assessee. The case of the Revenue was that the contract with the assessee is a composite contract un