Custom, Excise & Service Tax Tribunal
M/S. New Era Handling Agency vs Commissioner Of Service Tax, ... on 17 September, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No.ST/106/2012-Mum. (Arising out of Order-in-Original No.GOA/ST/16/Commr/11-12 dt.30.11.2011 passed by the Commissioner of Customs & Central Excise & Service Tax, Goa.) For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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M/s. New Era Handling Agency
:
Appellant
VS
Commissioner of Service Tax, Panaji-Goa.
:
Respondent
Appearance
Shri Naresh Thacker, Advocate for Appellant
Shri B. Kumar Iyer, Supdt. (A.R) for respondent
CORAM:
Mr. Ashok Jindal, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 17/09/2014
Date of decision : 17/09/2014
ORDER NO.
Per : Ashok Jindal
The appellant is in appeal against the impugned order wherein the service tax has been confirmed under the category of packaging services under Section 65(76b) of the Finance Act, 1994 along with interest and penalties under the Finance Act, 1994.
2. The appellant M/s. New Era Handling Agency (NEHA), Goa is engaged in providing packaging activity services in relation to fertilizer manufactured by M/s. Zuari Industries Ltd., Goa, for which they are receiving certain consideration. The department was of the view that the activity undertaken by the appellant would come under the category of packaging services as defined in Section 65 (76b) of the Finance Act, 1994 and, therefore, they are liable to pay service tax. Accordingly, show cause notice was issued demanding the service tax for the period 16/06/2005 to 31/03/2010. The show cause notice was adjudicated and demand was confirmed along with interest and equal amount of penalty was also imposed and penalty of Rs. 5,000/-. Aggrieved from the said order, the appellant is before us.
3. Shri Naresh Thacker, the Ld Counsel for the appellant appeared before us and submits that as per Essential Commodities Act read with Fertilizer Control Order 1985 (FCO), which governs the transaction relating to manufacture, sale and distribution of fertilizers and as per Clause 19 of the said FCO, there are restrictions on manufacture, sale and distribution of fertilizers which read as follows. No person shall himself or by any other person on his behalf sell, offer for sale, stock or exhibit for sale or distribute (a) any fertilizer the container whereof is not packed and marked in the manner laid down in this order; (b) any fertilizer the label or container where bears the name of any individual firm or company purporting to be manufacturer of the fertilizer, which individual, firm or company is fictitious or does not exist. Further as per Clause 21. Every manufacturer and pool handling agency shall in regard to packing and marking of containers of fertilizers comply with the following requirements.
4. Therefore, the packing of fertilizer is a statutory activity under the Fertilizer Control Order without which the fertilizer can not be marketed. He further submits that as per Section 2(f) of the Central Excise Act, 1944 defines manufacture to include any process, incidental or ancillary to the completion of a manufactured product. In these terms, manufacture of fertilizer is complete only when the packaging is done. He further submits that the packaging activity has defined in Section 65 (76b) of the Finance Act, 1994, excludes the packaging of fertilizer since the said section excludes any activity which amounts to manufacture under Section 2(f) of the Central Excise Act, 1994. He also relies on the decision of Honble High Court of Madhya Pradesh in the case of Maa Sharda Wine Traders v. Union of India reported in 2009 (15) STR 3 (M.P.). Therefore, he prayed that as without packaging fertilizer cannot be marketed and therefore packaging is integrally connected with the completion of the manufacturing process and hence, the said activity squarely falls under Section 2(f) of the Central Excise Act, 1944. He further submits that M/s. Zuari Industries Ltd. have discharged the Central Excise duty by adding the packaging charges in their assessable value. In these terms, he submits that their activity does not fall under the packaging activity as per section 65 (76b) of the Finance Act, 1994. Therefore, impugned order is required to be set aside.
5. On the other hand Ld. AR submits that manufacture of fertilizer is complete even before it is packed and even after packaging, fertilizer remains fertilizer and therefore, process of packaging undertaken does not come under the definition of Section 2(f) of the Central Excise Act, 1944. As the process undertaken by the appellant is not a process incidental or ancillary to complete the manufactured product as the fertilizer is already completed. He further submit that for bulk sale of fertilizer, no packaging is required. In these terms, the appeal is required to be dismissed.
4. Heard both sides. Considered the submissions in detail.
5. As per Essential Commodity Act 1955, read with Fertilizer Control Act Order 1985, we find that it is cleared that fertilizer can not be marketed without packaging in the manner specified under the said order, thus packaging of fertilizer is a statutory requirement for sale of the fertilizer. We further find that for sale of fertilizer in bulk requires license to sale in bulk, as the appellant is not having any such license, therefore packaging is a statutory requirement for sale of fertilizer by M/s. Zuari Industries Ltd. If marketing of fertilizer cannot take place without packaging, the appellant is a manufacturer as per Section 2(f)(i) of the Central Excise Act 1944, wherein manufacturer includes any process incidental or ancillary to the completion of a manufactured final product. In other terms, the completion of fertilizer manufacture product when packaging is done and without packaging, the fertilizer can not be marketed. Therefore, we do agree with the contention of the Ld. Counsel for the appellant that activity of packaging undertaken by them in respect of fertilizer would form and integral part of manufacturing activity and cannot be said the service activity, especially, in the context of packaging activity as defined in Section 65(76b) which exclude from scope of any activity of manufacture as defined in Section 2(f) of the Central Excise Act, 1944. Therefore, we hold that appellant being a manufacturer is doing the packaging activity and does not fall under packaging activity defined in Section 65(76b) of the Finance Act 1994.
6. With these terms, we set aside the impugned order and allow the appeal with consequential relief if any.
(Pronounced in court) (P. S. Pruthi) Member (Technical) (Ashok Jindal) Member (Judicial) Sm ??
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