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MILK CHILLING WHETHER MANUFACTURE ?

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 10-9-2015 Last Replied Date:- 11-9-2015 - Meaning of Manufacture Under Central Excise Act, 1944, manufacture has been defined differently u/s 2(f) of the said Act. According to Section 2(f) of the Central Excise Act, 1944, Manufacture includes any process- incidental or ancillary to the completion of a manufactured product; which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tarif .....

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n the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. The definition under section 2(f) of Central Excise Act, 1944 is an inclusive definition and it should be construed in its natural meaning and interpretation which will include any process incidental or ancillary to the completion of manufacture of a product. The manufacture should result in change of raw material and finished goods must be different from the .....

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v. DCM 1962 (10) TMI 1 - SUPREME COURT OF INDIA observed that manufacture used as a verb means to bring into existence a new substance and does not mean merely to produce some change in a substance. In other words, the produce which arises out of the process must be commercially a distinct commodity different from that out of which it is processed. Whether or not something results in manufacture would depend on the facts of the case. It is well settled that a question as to when a manufacture o .....

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definition of manufacture as defined under section 2(f) of the Central Excise Act, 1944. There are two reasons due to which the chilling activities are not covered under the scope of manufacture. As the milk is highly perishable in nature and shelf life of the milk is very short, therefore, milk has a limitation of being transported to distant places. To overcome such situation and to prolong the shelf life of milk so as to transport it to distant places, the process of chilling of milk is inevi .....

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rpose other than storage purpose. A process is carried out on some goods for the purpose of production / manufacture of some goods or at least to carry out some change in the goods. The chilling being done by dairies on their own milk, is not for the purpose of production of some goods or to carry out any change in the milk and thus chilling of the milk cannot be said as processing of milk. In Mewar Foods Pvt. Ltd. v. CCE, Jaipur 2014 (1) TMI 355 - CESTAT NEW DELHI, it was held that, prima facie .....

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goods (milk) for, or on behalf of, the client in as much as no goods (milk) has been supplied by dairy but dairy has itself undertaken the chilling activities by utilizing the infrastructure/manpower provided by the chilling unit. It was thus held that the facilities/ services provided by the chilling units are not covered by sub-clause (v) of clause 19 of section 65 of the Finance Act, 1994 as business auxiliary services. It may thus be inferred that chilling activities in relation to milk may .....

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