ST - Packaging - As per Fertiliser Control Order, packaging before marketing is statutory requirement - activity of packaging would, therefore, form integral part of manufacturing in terms of s.2(f)(i) of CEA, 1944 and cannot be viewed as service: CESTAT

The judgement is shocking and merits to be amongst the worst of the Tribunals' judgements.
. As per S.65(76b) of Finance Act 1994 "packaging activity" means packaging of goods including pouch filling, bottling, labelling or imprinting of the package, 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. This definition makes no distinction between packaging done voluntarily or under compulsion of any law. Thus only that packaging activity which 'amounts to manufacture' within the meaning of Sec 2(f) of C Ex Act is outside the the purview of service tax. As per S. 2(f) ibid "manufacture" includes any process incidental or ancillary to the completion of a manufactured product. But as anyone having even a passing acquaintance with Central Excise should know, it is well known/settled that every process incidental or ancillary to the completion of a manufactured product does not amount to manufacture and it can be nobody's case that packaging (of fertiliser), though incidental or ancillary to the completion of manufactured product( fertiliser), amounts to manufacture. Therefore Tribunal deserves to be congratulated for achieving such astounding level of ignorance and lack of understanding as is arguably impossible to achieve at its level. Needless to add that certain packaging activities by virtue of legal fiction are declared to be amounting to manufacture.

nikhil sharma 28/10/2014