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2016 (6) TMI 366 - CESTAT NEW DELHI

2016 (6) TMI 366 - CESTAT NEW DELHI - 2016 (44) S.T.R. 133 (Tri. - Del.) - 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 o .....

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who are providing services to appellant not the other way around. It cannot 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/554/201 .....

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de Foreign Liquor (IMFL). They are engaged in the manufacture of IMFL in their 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 reg .....

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irmed against the appellant along with imposition of penalty under various 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 b .....

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ent carried out in the definition of Business Auxiliary Services with effect 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 at .....

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consideration for provision of services to the bottlers. The appellants own 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 .....

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sisting and procuring orders for appellants brand; providing assistance and 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 .....

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iliary Services category. Here it is relevant to examine the Boards circular 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 underta .....

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h the reasoning given by the lower authorities. He found that the goods manufactured 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 .....

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eeds are received by the appellants and the CBUs are paid amount as per the pre fixed rates. It is relevant to note here that after the amendment carried out w.e.f. 01.10.2009 in the definition of Business Auxiliary Services the CBUs are paying service tax under the said category. This will shows that it is the CBUs who are providing services to appellant not the other way around. It cannot be said that the appellants are promoting the business of bottlers. 8. We find that similar issue came for .....

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