By TIOL News Service

MUMBAI, FEB 12, 2013: THE appellants are manufacturers of sugar and denatured spirit/denatured ethanol. The appellants are manufacturing country liquor under the registered brand name of "Pahili Dhar"and are having an agreement with M/s. Talreja Trade (HUF) for marketing of the said country liquor. M/s. Talreja Trade (HUF) is also supplying the essence and packing materials for manufacturing of country liquor to the appellants.

The revenue is of the view that the raw material is being supplied by M/s. Talreja Trade (HUF) to the appellant and the appellants are job workers for Talreja Trade. Therefore, the appellants are liable to pay service tax under the category of "Business Auxiliary Service".

Since the demand of Rs. 2,26,147/- along with interest and various penalties under the Finance Act, 1994 was confirmed by the lower authorities, the appellant is before the CESTAT.

The Bench observed -

"5. After considering the submissions made by both sides and going through the records, we find that the appellants are the manufacturer of country liquor under the brand name ”Pahili Dhar"which is a registered trade name of the appellant themselves. The appellants are having the agreement with M/s. Talreja Trade (HUF) for marketing this liquor. Therefore, it cannot be said that the appellant are the job workers for Talreja Trade as they are the selling agents of the appellants. With these observations, we find that the appellant are not liable to pay service tax under "Business Auxiliary Service"on the above mentioned activity. Accordingly, the appeal is allowed with consequential relief, if any."

In passing: Incidentally, there is another service tax demand of Rs.38.39 lakhs raised and confirmed by the CCE, Pune-II in the year 2008 & in respect of the same appellant for the same agreement with M/s Talreja Trade (HUF) and in appeal the CESTAT had granted a complete waiver of pre-deposit. We had reported this order as (2009-TIOL-1029-CESTAT-MUM). Interestingly, in that case the Revenue allegation was that since the applicants have allowed M/s Talreja Trade (HUF) to use their brand name "Pahili Dhar" in selling the products, they are liable to pay Service Tax under the category "Intellectual Property Services".

The Bench had while granting stay observed -

"5. After considering the arguments made by both the parties and perused the records, we find that nowhere the Department has made out that M/s Talreja Trade is using the brand name of the applicants for their products. We also find that the applicants are having a good prima facie case in their favour. In view of the above, we grant complete waiver of pre-deposit of entire service tax and penalties till final disposal of the appeal."

This order does not find a mention in the present proceedings.

I have taken more good from alcohol than alcohol has taken from me - Winston Churchill.

(See 2013-TIOL-263-CESTAT-MUM)