2016 (6) TMI 1072 - AT - Service Tax

Job work - activity of processing of chilling of milk - deemed manufacturing or not - Business auxiliary service - revenue argued that Chapter Note 6 to Chapter 4 ibid is to be interpreted keeping in view the principles of noscitur sociis by virtue of which the expression any other treatment appearing in the said chapter note has to be only such treatments which are similar to labelling or relabeling of containers or repacking from bulk packs to retails packs and seen in this context chilling would not be the treatment covered within the scope of the expression any other treatment mentioned in the said Chapter Note 6. Held that - There is no doubt that chilling of milk is a treatment which renders the milk marketable. For example chilling of milk makes it possible to market/sell it to the consumers at places which are located at considerable distances. That chilling of milk is a treatment is too obvious to warrant any explaining/discussion. Consequently by virtue of the said chapter note, chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax. - Demand of service tax set aside - Decided in favor of assessee.

Summary

Issues:
Appeal against service tax demand for chilling of milk under business auxiliary service - Interpretation of Chapter Note 6 to Chapter 4 of Central Excise Tariff - Applicability of noscitur sociis principle.

Analysis:
The appellant appealed against a service tax demand of ?4,98,805 for chilling milk for a dairy cooperative. The advocate argued that chilling of milk amounts to manufacturing, exempting it from service tax. Referring to a previous judgment, it was contended that chilling of milk is not a business auxiliary service. The Departmental Representative (DR) argued that chilling of milk falls under business auxiliary service as per Chapter Note 6, rejecting the precedent judgment's value.

The Tribunal acknowledged the previous judgment's finding that chilling of milk does not constitute manufacturing, leading to a successful appeal. The Tribunal emphasized that chilling of milk renders it marketable, aligning with Chapter Note 6, which exempts processes amounting to manufacture from service tax. The Tribunal disagreed with the DR's interpretation of noscitur sociis, stating that the principle does not apply due to the clear language of Chapter Note 6, which specifies treatments to make products marketable.

In conclusion, the Tribunal upheld the appeal, following the reasoning in the previous judgment that chilling of milk does not fall under business auxiliary service. The decision was based on the interpretation of Chapter Note 6 and the absence of ambiguity in its language, rendering the noscitur sociis principle inapplicable. The impugned order was set aside, and the appeal was allowed.