2016 (12) TMI 1586 - AT - Service Tax

Manufacture - Packaging activity - liability to tax - The appellants are engaged in packaging bumpers for the tractors - Held that - the claim of appellant that the activity performed by the appellant is packing of bumpers and no new product emerged after such packing, is not correct - The provisions of Section 2 (f) of the Central Excise Act are attracted in the present case - appeal dismissed - decided against appellant.

Summary

Issues:
1. Service tax liability under packaging activity.
2. Applicability of Section 2(f) of the Central Excise Act, 1994 to exclude service tax liability.

Analysis:
1. The appeal addressed the service tax liability concerning packaging services provided by the appellants to a company. The dispute revolved around the interpretation of Section 65(76)(b) of the Finance Act, 1994, which deals with packaging activity's service tax liability. The Original Authority confirmed a service tax liability of &8377; 17,63,468 on the appellant, along with penalties under Sections 77 and 78. However, on appeal, the Commissioner (Appeals) reduced the demand to &8377; 13,35,274 by granting cum tax benefit and excluding the value of goods transferred. Additionally, the penalties were waived under Section 80 of the Act.

2. The core issue in the appeal was the appellant's contention regarding their service tax liability under packaging activity. The appellant argued that since packaging was incidental to the final product's manufacture, their activity fell within the scope of Section 2(f) of the Central Excise Act, 1994, which exempts such activities from service tax liability. Despite the appellant's claim, the lower Authorities found that the activity of packing bumpers did not result in the emergence of a new product, thereby not attracting the provisions of Section 2(f) of the Central Excise Act.

3. During the proceedings, the appellant did not appear, and the case was decided based on their written submissions through their advocate. The Tribunal examined the facts and legal positions, affirming the lower Authorities' findings. It was noted that the lower Authorities correctly analyzed the appellant's activities as falling under the service tax liability for packaging services. The Tribunal found no grounds to interfere with the lower Authority's decision, as the factual findings were uncontested, and the legal positions were accurately assessed. Moreover, the concessions granted by the First Appellate Authority, including cum duty benefit and penalty waivers, were duly considered.

4. Ultimately, the Tribunal dismissed the appeal, upholding the lower Authorities' decision regarding the appellant's service tax liability under packaging activity. The Tribunal's decision was based on the correct interpretation of the law and the factual assessment conducted by the lower Authorities. The appeal was concluded with the dismissal of the appellant's claims, affirming the service tax liability on the packaging services provided by the appellants.

Conclusion:
The Tribunal affirmed the service tax liability on the appellant for packaging services provided to a company, rejecting the appellant's argument based on the applicability of Section 2(f) of the Central Excise Act, 1994. The decision upheld the lower Authorities' findings and concessions granted by the First Appellate Authority, leading to the dismissal of the appellant's appeal.