2011 (2) TMI 469 - AT - Service Tax

Job Work - business auxiliary service - Their activity was procuring raw material, producing alcoholic beverage, bottling, packing and sale of the product as Indian made foreign liquor (IMFL) on behalf of their customers - Board s Circular No. 249/1/2006-CX.4, dated 27-10-2008 - In view of the decision in Rubicon Formulations Ltd. v. CC,CE& ST (2010 -TMI - 75965 - CESTAT, Mumbai), decided in favor of assessee.

Summary

Issues:
1. Whether the activity of procuring raw material, producing alcoholic beverage, bottling, packing, and selling the product as Indian made foreign liquor (IMFL) amounts to 'business auxiliary service' for service tax levy.
2. Applicability of Circular No. 249/1/2006-CX.4 in determining liability for service tax.
3. Whether packing and labeling activities fall under 'business auxiliary service'.

Issue 1:
The appeal addressed the question of whether the activities conducted by the assessee, including procuring raw material, manufacturing alcoholic beverages, bottling, packing, and selling IMFL on behalf of customers, should be categorized as 'business auxiliary service' for service tax purposes. The appellant contended that their actions constituted manufacturing under the Central Excise Act and thus were not covered under 'business auxiliary service' as defined by the Finance Act, 1994. However, the department disagreed, leading to the imposition of service tax and penalties. The Commissioner (Appeals) upheld the decision, prompting the appellant to file the present appeal.

Issue 2:
The appellant cited previous orders in their favor for different periods and referenced a similar case where a demand for service tax was set aside based on Circular No. 249/1/2006-CX.4. The appellant argued that the circular should apply in their case as well. The Bench acknowledged the previous orders and the circular, noting that the packing and labeling activities, which were part of the appellant's operations, might still be considered 'business auxiliary service.' Despite this, the decision in a related case supported the appellant's position, emphasizing the binding nature of the circular on departmental authorities.

Issue 3:
The judgment ultimately set aside the impugned order and allowed the appeal in favor of the appellant. This decision was influenced by the precedent set in a similar case where the demand for service tax was rejected based on the application of Circular No. 249/1/2006-CX.4. The ruling highlighted the importance of considering previous decisions and circulars in determining the liability for service tax, ultimately leading to a favorable outcome for the appellant.

This comprehensive analysis of the judgment delves into the core issues raised, the arguments presented, and the legal precedents considered, providing a detailed overview of the decision-making process and its implications.