Blending, Bottling, and Packaging of IMFL not subject to Service Tax as ‘Business Auxiliary Service’: CESTAT [Read Order]

The Customs, Excise, and Service Tax Appellate Tribunal (ITAT), Kolkata has held that blending, bottling, and packaging of Indian-made foreign liquor (IMFL) are not subject to service tax as ‘Business Auxiliary Service’.

The assessee, M/s. Hi-Tech Bottling Private Limited is engaged in carrying out the job of bottling, blending, and labeling Indian-made Foreign Liquor (IMFL). The Commissioner dropped the demand of Service Tax including Education Cess amounting to Rs.95,14,725/- along with interest and penalty. Hence the revenue filed an appeal before the CESTAT.

The counsel for the respondents submitted that the process of manufacture consisting of blending, bottling, and packaging of Indian-made foreign liquor is covered under Section 2(f) of the Central Excise Act, 1944, and hence, it is excluded from the purview of Business Auxiliary service under Section 65(19) of the Finance Act, 1994. The ‘manufacture’ and ‘excisable goods’ are two independent concepts and it is not necessary that a process amounting to manufacture within the meaning of Section 2(f) should always result in the emergence of excisable goods and vice versa.

The Tribunal observed that in view of draft Circular F.No. 249/1/2006-CX.9, the Commissioner has held that the processes undertaken would not amount to a taxable service under the category of ‘Business Auxiliary Service’. The Tribunal further observed that the respondent acted throughout under the instruction and vigil of the service receivers for the production of IMFL. HTB has no control over the prices of IMFL products which is determined by the clients who are the actual owner of the IMFL products. HTB has raised bills of different charges/expenses such as bottling charges, manufacturing charges, etc. incurred by them for production of IMFL on behalf of clients and have been paid also.

The Coram of Mr. Sanjiv Srivastava, Member (Technical), and Mr. P. Dinesha, Member (Judicial) while dismissing the appeal has held that “we do not find any reason to differ with the conclusions arrived at by the Commissioner. Nothing has been stated by the Revenue while filing this Appeal before us”.

Mr. K. Chowdhury appeared on behalf of the appellant.

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