The Delhi bench of the Customs Excise & Service Tax Applellate Tribunal ( CESTAT ) has held that sale of beer which is an alcoholic liquor for human consumption is taxable under Business Auxiliary Service. The Tribunal directed the adjudicating authority to consider the same and allow the benefit of exemption notification as claimed by the appellants.
M/s. Winsome Breweries Limited are having the manufacturing facilities as well the required statutory licences for the manufacture and sale of alcoholic liquor ( Beer ) for human consumption. The appellant entered Into an agreement with M/s. United Breweries Limited which was amended from time to time, under which, alcoholic liquor ( Beer ) bearing the brand names ‘Kingfisher’ & ‘Bullet’ owned by M/s. United Breweries Limited ( M/s UBL) would be manufactured by the appellant under job-work basis, under the complete control and supervision of M/s UBL.
Post the amendment to the definition of “Business auxiliary Service” ( BAS ) under Section 65(19) of Finance Act, 1994 w.e.f 1.09, 2009 the exemption from the production or processing of goods for or on behalf of the client had been restricted to the “excisable goods” and thus, in this case, admittedly the alcoholic liquor for human consumption are not “excisable goods” and hence the appellant’s activity was covered under the amended definition of BAS wef 1.09.2009 and was liable to Service Tax. The period of dispute in this present appeal is from 1.09.2009 till 30.06.2012 and the show cause notice dated 05.08.2014 was issued invoking the larger period of limitation under Sec 73(1) of the Finance Act, 1994, demanding Service Tax to the tune of Rs. 14, 85 ,16,613/- Arguments advanced by the party,
The Show cause notice as well as the Order – in – Original denied the benefit of exemption for the value of Inputs used, as per Notification No. 39/2009 ST dated 23.09.2009 and Notification No. 43/2009 ST Dated 02.12.2009 (issued for the period 01.09.2009 to 22.09.2009, under Section 11 C of the Central Excise Act, 1944 as made applicable to service tax) on the mere ground that the said benefit will be allowed only if the Cenvat Credit has not been availed however in the Statement of the Director of the Appellant Company Sh. R.K. Bagrodia has deposed that “as on today they have not availed Cenvat Credit paid on the inputs/raw materials however they reserve their right to claim Cenvat Credit as and when required in future”.
The Adjudicating Authority ( AA ) had presumed that the appellant may claim Cenvat Credit in the future, and denied the benefit of Notification No. 39/2009- St dated 23.09.2009 read with 43/2009 ST dated 02.12.2009.
It was further stated that Para 3.1 of CBIC letter D.O.F. No. 334/13/2009-TRU dated 06.07.2009 has clarified the issued as under: “3.1 Modification in Business Auxiliary Service ( BAS ) [section 65(19): It may be recalled that production or processing of goods for or on behalf of a client falls within the purview of this service. However, if any such activity amounts to manufacture within the meaning of section 2(f) of the Central Excise Act, the same is excluded from its purview. This exclusion has been modified to state that it would apply only if the activity results in manufacture of ‘excisable goods’. Both words/ phrases i.e. ‘manufacture’ and ‘excisable goods’ would have the same meaning as defined under the Central Excise Act. The impact of this change would be that even if a process of manufacture is undertaken to the client, but the resultant product does not falls under the category of excisable goods, such as alcoholic beverages, the service tax would be attracted. Certain other goods which would also fall under BAS on account of the proposed change would be kept outside the tax net b yway of exemption notification, to be issued at the appropriate time.”
The appellants have produced an affidavit by way of undertaking in relation to Notification No. 39/2009-ST dated 23.09.2009 read with Notification No. 43/2009-ST dated 02.12.2009. The appellants have now categorically stated that, they have not taken any Cenvat Credit nor intend to take the same, as per requirement of the aforesaid notifications.
A two member bench comprising of Mr Somesh Arora, Member ( Judicial ) And Ms Hemambika R Priya, Member ( Technical ) allowed the affidavit to be taken on record and directed the adjudicating authority to consider the same and allow the benefit of exemption notification as claimed by the appellants.
The CESTAT held that the adjudicating authority shall appropriately consider the benefit of the notification to be allowed to the appellant in the light of affidavit having been filed with undertaking of not availing the credit, which has been stated to be not taken till date by the appellant.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
