2016 (6) TMI 366

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..... Appellants are owners of various brands of Indian Made Foreign Liquor (IMFL). They are engaged in the manufacture of IMFL in their own distilleries and also had the liquor manufactured under contract arrangement. They have tied up with manufacturing units in various states to manufacture liquor with their brand names. There is common practice in the liquor industry for the brand owners to enter into bottling arrangements with contracted distilleries or contract bottling units (CBU). 2. Certain enquiries were conducted by the officers of DGCEI regarding service tax liability of the appellant with reference to their transactions with the CBUs. On entertaining the view that the appellants have rendered taxable services under the category ....

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....n the said arrangements. c) He also relied on the following decisions to support his arguments: i) BDA Pvt. Ltd. Vs. CCE Meerut-2015 (40) S.T.R. 352 (Tri-Del). ii) Diageo India Pvt. Ltd. vs. CCE Thane-II(2013-TIOL-790-CESTAT-Mum). iii) Skol Breweries Ltd. Vs. CCE & ST-2014-TIOL-588-CESTAT-Mum. d) The department has been attempting to confirm service tax liability of brand owners under various services categories like IPR services, Franchisee services etc. In these decisions the Tribunal examined the contractual arrangement and came to the conclusion that the brand owners are not providing any services to the CBUs. e) The appellants are not providing any market promotion services for the ....

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.... by the parties. The first schedule gives detailed guidelines for apportioning of sale proceeds of liquor. The fourth schedule of the agreement fixes the consideration per case of production quantity of branded liquor. 6. The case of the Revenue is that the appellants are providing services of identification of suppliers of raw materials, promotion and marketing of finished goods, collection of payment, sales from buyers. The appellant were allotted specific portion of sale proceeds as consideration for the services provided by them. As such, it is the case of the Revenue that they are liable for service tax under Business Auxiliary Services category. Here it is relevant to examine the Boards circular dated 27.10.2008 which explains in d....

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....in terms of the agreement the contract bottling units are actually manufacturing the branded liquor as job workers for the appellant for which they are getting fixed amount as per the rate approved in terms of the said agreement. The CBU has no freedom of marketing the manufactured products. The sale and distribution of manufactured product is in control of the appellants. Full sale proceeds are received by the appellants and the CBUs are paid amount as per the pre fixed rates. It is relevant to note here that after the amendment carried out w.e.f. 01.10.2009 in the definition of Business Auxiliary Services the CBUs are paying service tax under the said category. This will shows that it is the CBUs who are providing services to appellant no....