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TMI Blog2024 (9) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... . As such the present ex-gratia charges made by M/s. Parle to the appellant were towards making good the damages, losses or injuries arising from unintended events and does not emanate from any obligation on the part of any of the parties to tolerate an act or a situation and cannot be considered to be the payments for any services.' From the above decision, it can be seen that the facts in the above decision and in the present case are absolutely identical and issue involved is also common therefore the ratio of the above decision is directly applicable in the present case. In the present appeal also the impugned order is not sustainable and the same is set aside - Appeal is allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. C L MAHAR Ms. Rinki Arora , Advocate for the Appellant Shri Rajesh R Kurup , Superintendent ( AR ) for the Respondent ORDER RAMESH NAIR The brief facts of the case are that the appellant is engaged in the manufacture of Biscuits on contract manufacturing basis for M/s Parle. At relevant time due to less demand in the market the order for manufactured biscuits by M/s Parle is in lesser quantity and as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of confectionaries falling under Chapter 17 of Central Excise Tariff Act, 1985 for and on behalf of the principal manufacturer M/s. Parle Biscuits Pvt. Ltd., in terms of the agreement entered between the two. M/s. Parle is procuring the raw material and supplying the same to the appellant for manufacture of the confectionaries, which were being cleared by the appellant on payment of Excise duty on MRP as declared by M/s. Parle. 2. M/s. Parle is making payment of job charges to the appellant on per kilo basis of confectionary as agreed upon between the two. However in case the quantum of goods got manufactured by M/s. Parle is less than standard mutually agreed upon quantum, the appellants are entitled ex-gratia job charges to cover up the loss or deficiencies in normal job charges to be received by the appellant. The quantum of ex-gratia to be given to the appellant is computed based upon various factors like Per Day Maximum Output based on production capacity, Packing Capacity of per month and Output Ratio arrived at operating time of the plant to manufacture the confectionaries etc. As such, bills are raised by the appellant and paid by M/s. Parle. 3. Entertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is a declared service on which the Service Tax is leviable under Section 66B of the Act. In the present case apart from manufacturing and receiving the cost of the same, the appellants were also receiving the compensation charges under the head ex-gratia job charges. The same are not covered by any of the Acts as described under Section 66E(e) of the Finance Act, 1994. The said sub-clause proceeds to state various active and passive actions or reactions which are declared to be a service namely; to refrain from an act, or to tolerate an act or a situation, or to do an act. As such for invocation of the said clause, there has to be first a concurrence to assume an obligation to refrain from an act or tolerate an act etc. which are clearly absent in the present case. In the instant case, if the delivery of project gets delayed, or any other terms of the contract gests breached, which were expected to cause some damage or loss to the appellant, the contract itself provides for compensation to make good the possible damages owning to delay, or breach, as the case may be, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n intent to evade service tax, hence, extended period and penal provisions are not invokable; We find that the issue is no more res integra and is 6. squarely covered by the decision of the Tribunal in the case of M/s K. N. Food Industries Pvt. Ltd. vs. Commissioner of Central Excise CGST, Kanpur in Service Tax Appeal No.70737 of 2018 Final Order No.71917/2019 dated 26.11.2019. The relevant paragraphs are reproduced for ready reference :- 4. After hearing both the sides duly represented by Shri H. P. Kanade, learned advocate appearing for the appellant and Shri Shiv Pratap Singh, learned A.R. appearing for the Revenue, we find that the short issue required to be decided in the present appeal is as to whether the receipt of ex-gratia job charges amount by the appellant amounts to providing any services so as to attract the Service Tax on the same. We find that appellant is admittedly manufacturing confectionaries for and on behalf of the M/s Parle and is clearing the same upon payment of Central Excise duty on the basis of MRP declared by M/s Parle. It is only in situation when the appellant's capacity, as a manufacturer, is not being fully utilized by M/s Parle, their claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the appellant were towards making good the damages, losses or injuries arising from unintended events and does not emanate from any obligation on the part of any of the parties to tolerate an act or a situation and cannot be considered to be the payments for any services. 5. In view of the foregoing, we find no reasons to uphold the impugned orders. Inasmuch as the appeal stands allowed on merits, the plea of limitation is not being adverted to. 7. We find that the facts of the present case are squarely covered by the aforesaid decision of the Tribunal. In view of the above discussion, the impugned order cannot be sustained and is accordingly set aside. 8. The appeal filed by the Appellant is allowed with consequential relief, as per law. From both the above decisions, it can be seen that the facts in the above decisions and in the present case are absolutely identical and issue involved is also common therefore the ratio of the above decisions are directly applicable in the present case. 5. Following the above decisions , we are of the view that in the present appeal also the impugned order is not sustainable and the same is set aside. Appeal is allowed. ( Pronounced in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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