LexSIGNODE INDIA LIMITED versus COMMR.OF CEN. EXCISE & CUSTOMS - II
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[2017] 6 S.C.R. 997 SIGNODE INDIA LIMITED v. COMMR.OF CEN. EXCISE & CUSTOMS - II (Civil Appeal No. 6038-6039 of 2007) MARCH 08, 2017 [RANJAN GOGOi AND NAVIN SINHA, JJ.] Finance Act, 1994: ,-- A B ss.2(23), s.65 (23), s.65 (76b), s.65(105)(zr) and s.65 (105) (zzzf) - Service tax - Service rendered by appellant in the C manufacturing unit of Principal manufacturer - Liability sought to be fastened on the appellant on ground that service rendered by appellant 01nounted to "cargo handling service", however, appellant claimed that service rendered by it amounts to a "packaging activity'', which has become exigible to service tax by amendment 0 to Finance Act, 1994 and by insertion of s.65(76b) and s.65(105)(zzzf) with effect from 16.06.2005 - Tribunal found appellant liable to pay service tax for its activity for period prior to 2005 - Held: Cargo is understood to denote goods which are ready for transportation whereas packaging of goods is a stage prior - Activity undertaken by the appellant, though related to packing E activity, is at a stage when the goods are yet to clear the factory gate as manufactured goods for onward transportation - Admittedly, the appellant has nothing to do with the transportation of goods which it packs within the factory unit of the principal manufacturer prior to the goods leaving the factory - All activity undertaken by F the appellant is related to packaging activity - ''packaging activity" uls.65(76b) and "service rendered in relation to packaging activity" u/s.65(105)(zzzj) were inserted by the Finance Act, 2005, which is sufficiently indicative of legislative intent that packaging activity is different from cargo handling activity - Making appellant liable to tax for pre-amended period (prior to 16. 06. 2005) on basis that the G activity undertaken by it involves rendering of cargo handling service would run counter to the express legislative intention, in a situation where liability of appellant for post amendment period in ''packaging activity" has not been -even disputed by the Revenue - 997 H 998 A B c • SUPREME COURT REPORTS [2017] 6 S.C.R. Therefore, the appellant would not be liable to pay service tax 011 the service rendered by it in terms of s.65(23) r/w. s.65(105)(zr) of the Act prior to amendment made by the Finance Act, 2005. ss.65 (23), s.65 (76b}, s.65(105)(zr) and s.65 (105) (zzzj) - Distinction between the expressions "Cargo Handling Service" and "Packaging Activity" - Held: Cargo is understood to denote goods which are ready for transportation whereas packaging of goods is a stage prior i.e. before they become cargo and in fact on completion of such packaging the goods become cargo - Circular no.F.No.B.111112002-TRU dated 1.8.2002 issued by CBEC - Clause 3. Allowing the. appeals, the Court HELD: 1. Sections 65(76b) and 65(105)(zzzt) were both inserted by the Finance Act, 2005 with effect from 16.06.2005. The said amendment is sufficiently indicative of legislative intent D that packaging activity is different from cargo handling activity. A view, which would make the appellant liable to tax for.the pre- amended period (prior to 16.06.2005) on the basis that the activity undertaken by it involves rendering of cargo handling service would run counter to the expressed legislative intention in a situation where its liability, for the post amendment period, on E the basis that the appellant is engaged in "packaging activity" has not been disputed by the Revenue. [Para 6) [1001-E-F) 2.1 There is no dispute on the fact that the liability sought to be fastened on the appellant is on account of the activity undertaken by the appellant in the manufacturing unit of the F principal manufacturer. It is also not in dispute that such activity is prior to the goods leaving the factory gate and the charges paid to the appellant for rendering the service forms a part of the assessable value of the manufactured goods of the principal manufacturer. In such a situation, what to discern is the distinction G between the two expressions "Cargo Handling Service" and "Packaging Activity", as defined in the respective provisions of the Act. [Para 7) [1001-G-H; 1002-A) 2.2 A careful reading of Section 65(23) of the Act, which defines Cargo Handling Service would go to show that though H the word packing is included therein, the same is referable to SIGNODE INDIA LIMITED v. COMMR. OF CEN. EXCISE & 999 CUSTOMS-I
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