2019 (11) TMI 957 - AT - Service Tax

Nature of activity - manufacture of service? - activity of labeling or relabeling of containers and repackaging from the bulk packs to retail packs or adoption of any other treatment to render the products marketable - exclusion clause of Section 65 (29) - exemption from payment of service tax under Business Auxiliary Service . HELD THAT - As is evident from the notes to Chapter 4 of Central Excise Tariff Act, 1985 even adoption of any other treatment by itself or with packing/repacking, labeling/relabeling to make the product marketable amounts to manufacture. The definition under Chapter 4 of Central Excise Tariff Act, 1985 of manufacture is much wider and leaves no doubt in our mind that pasteurization, packing from bulk pack to branded consumer packs undertaken by the respondent clearly amounts to manufacture as per Note 6 of Chapter 4 of the Central Excise Tariff Act, 1985 - they get covered under the scope of definition manufacture as provided under Section 2 (f) of Central Excise Act, 1944. The provisions of law are absolutely unambiguous on this aspect and conclude that since the activity is of manufacture - the levy of service tax is excluded from the scope of levy of service tax under business auxiliary service - thus, the activity undertaken by the appellant is not leviable to service tax under business auxiliary service. Appeal dismissed - decided against Revenue.

Summary

Issues:
Condonation of delay in filing the appeal.
Determination of whether activities undertaken amount to manufacture.
Exemption from payment of service tax under Business Auxiliary Service.

Condonation of Delay:
The appellant-Revenue sought condonation of a 53-day delay in filing the appeal, attributing it to urgent office work. The delay was condoned in the interest of justice, and the appeal was accepted for hearing.

Activities Amounting to Manufacture:
The case involved a tripartite agreement where the respondent undertook various activities related to milk processing. The key issue was whether these activities amounted to manufacture under the law. The respondent argued that their activities fell under the exclusion clause of Section 65(29) and were exempt from service tax as they constituted manufacturing activities. The Department contended that the activities were purely service-based and not manufacturing, thus liable for service tax under Business Auxiliary Service.

Legal Analysis:
The Tribunal analyzed the activities undertaken by the respondent, including pasteurization, packing, and other processing steps. It referred to Chapter Note 6 of the Central Excise Tariff Act, which states that any treatment to render a product marketable amounts to manufacture. The Tribunal found that the activities, such as pasteurization and packing, undertaken by the respondent clearly fell within the definition of manufacture as per the Act. Consequently, the Tribunal held that the respondent's activities were not subject to service tax under Business Auxiliary Service.

Judgment:
The Tribunal dismissed the appeal filed by the Revenue, citing that the activities undertaken by the respondent were not liable for service tax under Business Auxiliary Service as they constituted manufacturing activities. The decision was supported by a previous ruling in the appellant's own case. The Tribunal allowed the condonation of delay and upheld the dismissal of the appeal.

This detailed analysis showcases the Tribunal's interpretation of the law regarding manufacturing activities and their exclusion from service tax under Business Auxiliary Service, resulting in the dismissal of the Revenue's appeal.