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TMI Blog2013 (9) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Department and JLSL was paying excise duty - There was no scope for PMSL to claim that their activity should also be considered as manufacturing activity in respect of the same goods - In a situation where the other party (JLSL in this case) was willing to pay excise duty at the time of clearance of the goods from the factory of manufacture there was no need to adopt the procedure laid down in Notification 214/86 - The predominant activities for manufacture were done by assesse (earlier known as PMSL). All the activities done by the assesses had to be seen together and when it was so seen it was clear that they were doing manufacturing activity - The fact that they were charging separately for fixed costs and variable costs was not disclosed to the department - this aspect could not actually change the nature of the activity - Decided in favor of Assesse. - ST/1772/2011 - ST/55576/2013(PB) - Dated:- 19-2-2013 - Shri D.N. Panda and Mathew John, JJ. Shri Devandra Sharma, Consultant, for the Appellant. Shri Pramod, Addl. Commissioner (AR), for the Respondent. ORDER The appellant is successor in interest of a company by name Pace Marketing Specialties Ltd. ( PMSL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff, wages to workers, depreciation on all assets, security charges, legal and professional expenses, travelling and conveyance, stationery and telephone etc. Apart from the above, certain variable charges were also recovered which were fixed after taking into consideration the power and fuel, contract workers, repairs of machinery, consumable stores etc. and were linked to the volume of production. 5. Since their entire factory was to be used for manufacturing activity using raw materials supplied by JLSL and JLSL was willing to clear the goods on payment of excise duty from the appellants factory, the appellants consulted the Excise department as to who should be registered for discharging excise duty liability. With the advice and consent of the department officials the Excise registration in the name of JSPL was surrendered and new registration taken in the -name of JLSL and they were paying excise duty on goods manufactured and cleared from the appellants factory. 6. Revenue was of the view that PMSL was providing Business Support Services as defined under 65(104c) made taxable under Section 65(105)(zzzq) of Finance Act, 1994. The Show Cause Notices demanding service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e collection and no additional cost component to the parties involved and therefore the allegation regarding intention to evade payment of tax is baseless. It is also pointed out that the audit team initially wanted to demand service tax under the category of Renting of Immovable Property . But later when SCN was issued the demand was made under Business Support Services which fact shows that the officers themselves were not clear on the taxability or classification of service and in such circumstances extended period could not be invoked. 9. The ld. AR for Revenue relying specifically on the explanation appended to Section 65(104c) submits that the appellant was just providing infrastructural support to JLSL. He argues that JLSL was not a manufacturer of excisable goods as is evident from the fact the appellant was not paying any excise duty. Further the appellant was not a manufacturer doing manufacturing operations under Notification 214/86-C.E. The actual manufacturer was JLSL who paid excise duty. The appellant was only providing support to JLSL by making its infrastructure available to JLSL and receiving consideration for such support service. Support consisted of making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Pollution) Act, 1974, Air (Pollution and Control of Pollution) Act, 1981, Labour and Industries Laws, Environment (Protection) Act, 1986, U.P.T.T. Act (if applicable) etc. Raw Materials and Packaging Materials 2.1 All the raw materials and packaging materials required for manufacturing of the products will be provided by JUBILANT. Such materials may be supplied by JUBILANT directly from the suppliers of JUBILANT or from the JUBILANT s plant and warehouses. PMSL shall assist JUBILANT in maintaining a detailed inventory statement of raw materials, packaging materials, WIP and finished products. 2.2 The materials may be duty paid or non-duty paid. Any loss suffered by JUBILANT due to non-availment of CENVAT benefits due to failure on the part of PMSL will be borne by PMSL. Quality 3.1 PMSL will test all the raw materials and packaging materials in accordance with the specification laid down by JUBILANT whether such materials are received directly from the suppliers of JUBILANT or from JUBILANT in the presence of manger/officer of JUBILANT. 3.2 JUBILANT shall have its own personnel at PMSL s facilities- to check the quality reports relating to the receipt and acceptan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant was providing service in the grab of job-work and deliberately accounted the charges received by them from JLSL as job charges . Though the contract was disclosed to the department the contract nowhere shows that they were to charge fixed costs and variable costs separately which fact demonstrates the true nature of the contract. This fact came out only during audit of the books of accounts of the appellant. He submits that the appellant did not take out registration for paying service tax and non-payment of tax could be detected only through audit of their books and hence there was suppression of information. 12. We have considered arguments on both sides. 13. We are in agreement with the contention that the same activity cannot be considered as manufacturing and subjected to excise levy and at the same time considered to be a service and subjected to service tax. This principle does not need much discussion and is also recognized under Section 65(19) of Finance Act, 1994 levying service tax on processing of goods not amounting to manufacture. Process amounting to manufacture is kept specifically out of the scope of the entry. That being the case such an activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; 17. Therefore if either party was to apply for registration as a manufacturer the department would have accepted the application. Excise regist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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