DAURALA SUGAR WORKS Vs. C.C.E.

JUDGEMENT

(1.) AS per the facts on record, the Appellant is engaged in the manufacture of alcoholic liquor for human consumption on job work basis for M/s Seagram. They also entered into an agreement with M/s Seagram for the said purpose as also to undertake the work of bottling of Seagram's alcoholic beverages at Seagram's plant located at Daurala and arrange the labour required for undertaking the work and supervise all the operation after receipt of blended material and up to transfer of finished goods into the godown provided for the purposes of storage of finished goods at the plant and loading into trucks at the said plant for despatch.

(2.) THE Revenue entertained a doubt that the above activities undertaken by the Appellant amounted to cargo handing services for the period 16.8.2002 to 9.9.2004 and to business auxiliary services for the period 10.9.2004 to 30.9.2006. Accordingly, a Show Cause Notice dated 26.7.2007 was issued to the Appellant requiring them to show cause as to why the Service Tax of Rs. 1,78,79,899/ - and education cess of Rs. 2,25,663/ - should not be confirmed against them along with confirmation of interest and as to why penalty should not be imposed upon them.

(3.) AFTER hearing both the sides, we find that the above issue is no more res integra. It is seen that judgment of the M.P. High Court in the case of Vindhyachal Distilleries Pvt. Ltd. v. State of M.P., 2006 (3) STR 723 supported Revenue's case but subsequently the matter was referred to the Larger Bench in the case of Som Distilleries and Breweries Pvt. Ltd. v. State of M.P. and Anr. : 1997 (1) JLJ 319. The Larger Bench judgment in the case of Maa Sharda Wine Traders v. Union of India : 2009 (15) STR 3 has held that packaging and bottling of liquor is covered by the definition of manufacture as defined in Section 2(f) of Central Excise Act, 1944 and will not attract any service tax liability. They accordingly over -ruled the earlier decision of the High Court in the case of Vindhyachal Distilleries. For better appreciation, we reproduce para 32 of the Larger Bench judgment in the case of Maa Sharda Wine Traders: