TaxTMI 
TaxTMI 
2022 (8) TMI 539
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....mounting to Rs. 67,99,067/- for the Financial Years 2010-11 to 2014-15 on the grounds that activity of filling LPG in the cylinders by the Appellant does not amount to manufacture and that it falls within the ambit of taxable category of "Packaging Service" under the service tax regime and an amount of Rs.12,20,990/- under Works Contract Services with equivalent penalty as proposed in the impugned Order-in-Original. 2. Briefly stated, the facts of the case are that the Appellant is engaged in assisting IOCL in producing "gas cylinders" by executing the work of segregation of cylinders, sealing of filled cylinders, deshaping of cylinders by hydraulic pressure, spray of pesticides, disposing of collected muck/sludge, dirt, and bottling of ....
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....t controlling devices. It is to be noted that technology, science and economics are the predominant features of the process of bottling LPG. The Appellant further invited our attention to Rule 2(xxxii) of the Gas Cylinder Rules, 2004, which defines "manufacture of gas" as filling of a cylinder with any compressed gas and includes transfer of compressed gas from one cylinder to any other cylinder. Thus the Appellant contended that such services are exempted being a process amounting to manufacture both prior to the negative list regime and even after the negative list regime vide Section 66D(e) of the Finance Act, 1994. The Appellant further contended that IOCL has been paying excise duty on such clearance of cylinders under CETH 2711 which ....
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....ds works contract services demand, he contended that penalty is imposable and extended period of demand is also sustainable in the current case. 6. Heard both sides and perused the appeal records. 7. We find that the issue to be decided is whether the activities carried upon by the Appellant viz. work of segregation of cylinders, sealing of filled cylinders, de-shaping of cylinders by hydraulic pressure, spray of pesticides, disposing of collected muck/sludge, dirt, and bottling of LPG into cylinders to be sold by IOCL for the purpose of domestic use is a process amounting to manufacture or not. 8. In this regard, we find that on perusal of the definitions of packaging service as existed up to 30/06/2012 and the negative list entry....
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....d by technically expert personnel. c) Bottling of LPG is an essential process for rendering the product marketable and usable for the end customer. d) The word "production" has a wider connotation in comparison to "manufacture" and any activity which brings a commercially new product into existence constitutes production. The process of bottling of LPG renders it capable of being marketed as a domestic kitchen fuel and thereby, makes it a viable commercial product. 9. We find that the revenue has not disputed the fact that excise duty is being paid by IOCL on clearances of gas cylinders and that the above expenditure is also a part of the valuation adopted for such purposes. Since these facts are not being disputed by t....