TaxTMI 
TaxTMI 
2024 (3) TMI 238
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure Development Corporation to take their industrial shed on lease to manufacture coils for M/s. Godrej Sara Lee Limited (in short 'GSLL'). On the basis of these agreements both the appellants were provided infrastructure, raw materials, technical knowhow, trade mark, production plan for GCPL/GSLL and GCPL/GSLL was also having quality control for the products. The appellant undertook the activity of production of mosquito repellant coils in their premises, but enquiries were conducted by the respondents with regard to activity undertaken by the appellants on the basis of the agreement entered into by them along with GCPL/GSLL and as per the tenor of the agreement, it was alleged that the appellants were engaged in the activity of providing infrastructure support service to GCPL/GSLL for manufacturing. The matter was contested by the appellants on the premise that the activity undertaken by the appellants amounts to manufacture in terms of section 2(f) of the Central Excise Act, 1944, but the Adjudicating authority confirmed that the appellants are not the manufacturer of the goods and GCPL/GSLL are the sole manufacturer and engaged in the activity of manufacturing by using their ow....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Heard the parties, considered the submissions. 8. We have gone through some of the clauses of the agreement placed before us which indicate that the manufacturer is GCPL/GSLL, but the said activity has been undertaken by the appellant, as appellants are having factory premises to manufacture the goods in question and raw material and machinery being provided by GCPL/GSLL, but manufacturing activity was undertaken by the appellant by employing their own labour and the appellant is charging from the GCPL/GSLL the charges of their activity in terms of per piece basis. For better appreciation of the facts, an invoice issued by the appellant No.1 on GCPL is extracted below:- 9. On going through the invoice issued by the appellant No.1, the appellant is charging price for goods manufactured by them in terms of quantity of goods manufactured. Moreover, labour has been employed by the appellant and by using their factory and manufactured the goods. These facts have not been examined by the Revenue, moreover, the demands sought to be raised only on the basis of the agreement entered by the appellants with GCPL/GSLL. Further, on the same activity in appellant's own case for the earlie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acturing undertaking the actual manufacture on account and as per the requirements of the principal manufacturer in the licensed premises of the latter. The agreement obligates the supporting manufacturer to carry out day to day operations and maintenance of the manufacturing plant set up by Godrej Sara Lee. An examination of the obligations of the supporting manufacturer evidences that they operate the plant and machinery to manufacture goods, by using employees of their own. In terms of further understanding mandated in the agreement, vide the letter of Godrej Sara Lee dated 14.05.04 to service provider, remuneration is made in the form of coil conversion rates for the quantity of goods produced by the supporting manufacturer at the rates agreed upon. Verification of the bills raised in this regard evidences that the charges have been made on the basis of the quantity of products manufactured and packaged and delivered to Godrej Sara Lee. This practice of remuneration on the basis of unit quantity produced and packed further reinforces the conclusion made above that the relationship between Godrej Sara Lee and service provider is that of a principal manufacturer and supporting ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arried out in furtherance to the agreement reveals that the process of manufacture in the instant case is undertaken by the supporting manufacturer for Godrej Sara Lee and that, the activity undertaken by them amounted to manufacture as defined in Section 2(f) of the Central Excise Act, 1944 and the goods being chargeable to excise duty, and duty being discharged by the principal manufacturer, as per law, the said activity cannot be considered to be a taxable service under the category of "business auxiliary service" and accordingly is not liable to service tax. Therefore, I find that the charges made in the notice are not sustainable and the demand made therein is not enforceable." and dropped the proceedings. 10. Further, in appellant's own case for another period, again the issue was examined and on that basis the adjudicating authority has observed as under:- "3.4 From the submission and documents submitted by the said Noticee, I find that the said Noticee had entered into an Agreement with M/s. Godrej Consumers Products Limtied (GCPL) for providing job work services. In terms of agreement, the said Noticee undertook an activity of manufacturing of mosquito coils....