2016 (6) TMI 1072

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....65(19) of Finance Act, 1994] but did not pay service tax thereon. The appellant is engaged in chilling of milk for M/s Jaipur Zila Dugdh Utpadk Sahakari Sangh Ltd. 2.  Ld. Advocate argued that as per Chapter Note 6 of Chapter 4 of Central Excise Tariff the process of chilling of milk amounts to manufacture and therefore the said activity is outside the purview of service tax as it would not be within the purview of service.   She also  cited the judgement in the case of  Sharma Ice Factory Vs. CCE, Jaipur-I - 2015(37) STR 660 (Tri.-Del.) wherein it was held that chilling of milk is not covered under business auxiliary service and a similar demand was set aside.  The said judgement in the case of Sharma Ic....

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....red the submissions from both the sides and perused the records. There is no dispute about the nature of the appellant's activity - chilling of milk to temperature below 5^0Celcius for M/s. SZDUSS Ltd. No other activity like pasteurization etc. is involved. We are of the view that mere chilling of milk to temperature below 5^0Celcius for the purpose of its long distance transportation, does not amount to production or processing of goods, as there is no permanent or temporary change in milk other than lowering of the temperature by the process of chilling of milk, due to which it can be transported over long distance without getting spoiled. The Apex Court in the case of Commissioner of Income Tax v. N.C. Budharaja & Co., reported in 2004-I....

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....t this stage, we would like to reproduce  Chapter Note 6 to Chapter 4: "6.     In relation to products of this Chapter labelling or relabeling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to "manufacture".           There is no doubt that chilling of milk is a treatment which renders the milk  marketable.  For example chilling of milk makes it  possible to market/sell it to the consumers at places which are located at considerable distances.  That chilling of milk is a treatment is too obvious to warrant any explaining/discuss....