2011 (3) TMI 665

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..... The demand along with interest on Service Tax was confirmed on the ground that the appellants are producing goods on behalf of their client during the period 10-9-04 to 15-6-05 under business auxiliary service, as during that period, the production of goods on behalf of the client is covered under the scope of Section 65(19) of Finance Act, 1994. Therefore the production or processing of goods on behalf of the clients was covered under the scope of Service Tax in the category of business auxiliary services and the penalties under Section 76 and 77 of the Finance Act, 1994 were also imposed. Aggrieved from the said order, the appellants are before us. 3 Ld. Advocate for the appellant submits that the appellants are engaged in the p....

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....part of the definition excluding any activity that amounts to "manufacture". Hence the appellants are liable to pay Service Tax on this activity of cutting paper into sheets. 6. Heard and considered. 7. We have gone through the submissions made by both the sides and we find that as per Section 65(19) of the Finance Act, the business auxiliary services has been defined wherein a specific sub-clause (v) is introduced to bring production of goods for, or on behalf of the client within the scope of Service Tax levy. It is admitted fact that the cutting of paper into sheets, does not amount to manufacture which is very much clear. But production and manufacture both are different terms and the case law relied upon by the ld. Advo....

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....ch the term is used in the provision under consideration. 16. In Black's Law Dictionary (5th Edition), the term "production" has been defined as under :- "Production. Process or act of producing. That which is produced or made; i.e. goods, fruit of labor, as the productions of the earth, comprehending all vegetables and fruits; the productions of intellect, or genius, as poems and prose compositions; the productions or art, as manufactures of every kind." 19. The expression "produced" was given a wider meaning that the word 'manufacture' pointing out that the word "produced" will include an activity of manufacturing the materials by applying human endeavour on some existing raw material, but the word "produce" may include....