NARAIN PACKAGING Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE prayer in the application is to dispense with the condition of pre -deposit of Service tax amount of Rs. 7,21,158/ - confirmed against the applicant and penalty of identical amount imposed under Section 78 and Rs. 1000/ - under Section 77 of the Finance Act, 1994. After hearing both sides duly represented by Shri Mayank Garg, ld. Advocate appearing for the appellant and Shri Nagesh Pathak, ld. A.R. appearing for Revenue we find that said amount of Service tax stands confirmed against the appellant on the ground that they have undertaken the activity of packaging of paper produced by M/s. J.K. Paper Ltd. The appellant has installed its packing machine and strapping machine in the factory of M/s. J.K. Paper Ltd. who are engaged in the manufacture of paper and clearing their final product on payment of duty of excise.

(2.) FOR the purpose of stay we find that the packing activity in terms of sub -section 76(b) includes packaging of goods but does not include any packaging activity that amounts to 'manufacture' within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944. Said Section 2(f)(iii) defines 'manufacture' as a process which involves packing or repacking of such goods in a unit container or labeling or re -labeling of containers or adoption of any other treatment on the goods to render the product marketable to the consumer. Appellant's contention is that packing is covered under definition of 'manufacture' and was excluded from the activity of packing liable to Service tax. Otherwise also, it stands pleaded before us that inasmuch as the paper becomes marketable only after the same is duly packed in the wrapping paper, the said activity has to be held as manufacturing activity.