2014 (1) TMI 355 - AT - Service Tax

Business auxiliary services - Pasteurisation of milk - Held that - prima facie process of pasteurisation is a process necessary to make milk marketable to the consumer and is covered by the Chapter 6 and Chapter 4 of Central Excise Act, 1985. Therefore, we find it proper to grant waiver of pre-deposit of dues arising from the impugned order, for admission of appeal. It is ordered accordingly and there shall be stay on collection on such dues during the pendency of the appeal - Stay granted.

Summary

Issues involved:
1. Whether pasteurization and packing of milk amount to manufacture for taxation purposes under the Central Excise Act, 1985?

Analysis:
1. The main issue in this case pertains to whether the processes of pasteurization and packing of milk qualify as manufacturing activities under the Central Excise Act, 1985. The Revenue contended that these activities fall under "business auxiliary services" and are taxable as such. However, the appellant argued that pasteurization is a crucial process that renders milk marketable to consumers and should be considered as manufacturing under Chapter Note 6 of Chapter 4 of the Central Excise Tariff.

2. The appellant's counsel highlighted that pasteurization transforms milk into a consumer-ready product, thereby meeting the criteria for manufacturing as defined in Chapter Note 6. On the other hand, the Revenue's representative asserted that chilling milk, including pasteurization, does not result in the creation of a new commodity and, therefore, does not constitute manufacturing. Consequently, the Revenue argued that the activity should be subject to Service Tax under the category of "business-auxiliary service."

3. The Tribunal, after considering the arguments presented by both parties, was inclined to agree with the appellant's position. The Tribunal found merit in the appellant's contention that pasteurization is an essential process for making milk marketable to consumers, falling within the purview of Chapter 6 and Chapter 4 of the Central Excise Act, 1985. Consequently, the Tribunal granted a waiver of pre-deposit of dues arising from the disputed order and ordered a stay on the collection of such dues during the pendency of the appeal.

4. In conclusion, the Tribunal's decision revolved around the interpretation of whether pasteurization and packing of milk constitute manufacturing activities under the Central Excise Act, 1985. The Tribunal's ruling in favor of considering pasteurization as a necessary process for making milk marketable underscores the significance of Chapter Note 6 in determining what activities qualify as manufacturing for taxation purposes.