Manufacture excludes mandatory bottling and sealing of country liquor, so packaging service tax does not apply.

Bottling and packaging of country liquor are treated as part of manufacture, not as independent packaging services, because the service tax definition excludes activities amounting to manufacture by reference to section 2(f) of the Central Excise Act, 1944. The Court applied the referred definition of manufacture to include incidental or ancillary processes necessary to complete the product, and read the statutory scheme, excise rules, tender conditions, circulars, and the practical requirement that liquor cannot be supplied without bottling as showing that bottling and sealing are integral to manufacturing. As a result, such activities do not attract service tax under section 65(76b) of the Finance Act, 1994.

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Issues: Whether bottling and packaging of country liquor fall within the expression "manufacture" so as to be excluded from service tax under the relevant service tax definition.

Analysis: The definition of "packaging activity" in the Finance Act included bottling and labeling, but expressly excluded any activity amounting to manufacture within the meaning of section 2(f) of the Central Excise Act, 1944. The Court treated that definition as a referential incorporation and held that "manufacture" under section 2(f) extends to any process incidental or ancillary to completion of the manufactured product. Reading the statutory scheme, the excise rules, the tender conditions, the Board's circulars, and the earlier view that liquor cannot be supplied without bottling, the Court held that bottling and sealing were not independent packaging services but formed an integral part of the manufacturing process.

Conclusion: Bottling and packaging of liquor are part of manufacture and therefore do not attract service tax under section 65(76b) of the Finance Act, 1994.

Ratio Decidendi: Where a taxing provision excludes activities amounting to manufacture by reference to another statute, the referred definition must be applied so as to cover all incidental or ancillary processes integral to completion of the product, including mandatory bottling and sealing forming part of manufacture.

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