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M/s. Radico Khaitan Ltd. Versus C.S.T. Delhi

2016 (6) TMI 366 - CESTAT NEW DELHI

Business Auxiliary Services rendered to various contracted CBU's - Whether or not the appellant have provided taxable services to the bottling units - Contract between appellant and various distilleries - Held that:- in terms of the agreement the contract bottling units are actually manufacturing the branded liquor as job workers for the appellant for which they are getting fixed amount as per the rate approved in terms of the said agreement. The CBU has no freedom of marketing the manufactured .....

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be said that the appellants are promoting the business of bottlers. Therefore, by considering the applicability of Boards circular dated 27.10.2008, the various decided case and also the tax liability on CBUs introduced with effect from 01.09.2009 under Business Auxiliary Services category, it is clear that the impugned order is not sustainable and is set aside. - Decided in favour of appellant - Appeal No. ST/554/2010, ST/45/2012 & ST/57177/2013-ST(DB) - FINAL ORDER NO. 51956-51958/2016-EX( .....

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eir own distilleries and also had the liquor manufactured under contract arrangement. They have tied up with manufacturing units in various states to manufacture liquor with their brand names. There is common practice in the liquor industry for the brand owners to enter into bottling arrangements with contracted distilleries or contract bottling units (CBU). 2. Certain enquiries were conducted by the officers of DGCEI regarding service tax liability of the appellant with reference to their trans .....

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sections of Finance Act, 1994. 3. The Ld. Counsel for the appellant submitted that the appellants have entered into contracts with various distilleries and these contracts are all substantially similar in nature. For reference he relied on an agreement dated 12.04.2004 entered by the appellant with Gemini Distillery (Goa) Pvt. Ltd. The arguments of the Ld. Counsel for the appellant can be summarized as below:- a) As can be seen from the terms of the agreements there is no service rendered by the .....

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ect from 01.09.2009 making the bottlers liable to service tax under Business Auxiliary Services in the said arrangements. c) He also relied on the following decisions to support his arguments: i) BDA Pvt. Ltd. Vs. CCE Meerut-2015 (40) S.T.R. 352 (Tri-Del). ii) Diageo India Pvt. Ltd. vs. CCE Thane-II(2013-TIOL-790-CESTAT-Mum). iii) Skol Breweries Ltd. Vs. CCE & ST-2014-TIOL-588-CESTAT-Mum. d) The department has been attempting to confirm service tax liability of brand owners under various ser .....

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brands and make business profit by getting that manufactured by the bottlers and marketing the same. 4. The Ld. AR opposed the contention of the appellants. He reiterated the findings in the impugned order and stated that the case laws relied upon are dealing with different services and not the tax liability under Business Auxiliary Services. 5. We have heard both the sides and examined the appeal records. The point of dispute is whether or not the appellant have provided taxable services to .....

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guidance in quality control and arrange working capital finance etc. The CBUs has obligation of obtaining necessary permits to manufacture and dispatch from time to time the branded liquor to places as specified by the appellants. The agreement also stipulates the various costs to be borne by the parties. The first schedule gives detailed guidelines for apportioning of sale proceeds of liquor. The fourth schedule of the agreement fixes the consideration per case of production quantity of brande .....

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r dated 27.10.2008 which explains in details the background issue, the business arrangement involved in production of branded liquor. It was clarified that if the CBU undertakes complete process of manufacture of alcoholic beverages under the contract bottling arrangement such activity would not fall under the taxable services namely Business Auxiliary Services. It was further clarified that in case the activity undertaken by the CBU falls short to the definition of manufacture (such activity .....

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ufactured by the distillers under agreement are the property of the distillers and they are responsible for complying with legal requirements, payment of tax etc on these products. We find that original authority grossly erred in appreciating the terms of the agreement and in not following the Boards clarification dated 27.10.2008. It is clear from the fourth schedule of the agreement that the contract bottlers will get the fixed amount per case for manufacture of liquor with the brand name of .....

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