w w w . L a w y e r S e r v i c e s . i n



Konkan Agro Marine Industries Pvt. Ltd V/S C.C.E., CUS. & S.T., Aurangabad


Company & Directors' Information:- R K B AGRO INDUSTRIES LIMITED [Active] CIN = L17100KA1979PLC003492

Company & Directors' Information:- J R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15342UP1982PTC005792

Company & Directors' Information:- K E B MARINE PRIVATE LIMITED [Active] CIN = U74999GJ2020PTC118524

Company & Directors' Information:- B M AGRO INDUSTRIES LIMITED [Active] CIN = U74899DL1992PLC049988

Company & Directors' Information:- S P S MARINE PRIVATE LIMITED [Active] CIN = U63010MH2008PTC184454

Company & Directors' Information:- R S AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15319DL1998PTC097025

Company & Directors' Information:- S N T AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U01122DL1997PTC086925

Company & Directors' Information:- D D AGRO INDUSTRIES LIMITED [Active] CIN = U24219PB1999PLC022487

Company & Directors' Information:- KONKAN AGRO MARINE INDUSTRIES PRIVATE LIMITED [Active] CIN = U10100MH1971PTC015424

Company & Directors' Information:- S S D AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100MH1998PTC113744

Company & Directors' Information:- A S MARINE INDUSTRIES PRIVATE LIMITED [Active] CIN = U05005KL1995PTC009839

Company & Directors' Information:- S. A. B. INDIA AGRO INDUSTRIES LIMITED [Active] CIN = U01403UP2009PLC038365

Company & Directors' Information:- U K AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15114UP2003PTC028107

Company & Directors' Information:- R. K. AGRO INDUSTRIES PRIVATE LIMITED [Under Process of Striking Off] CIN = U15410WB2012PTC180269

Company & Directors' Information:- R J AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15311KA2005PTC035485

Company & Directors' Information:- S O I AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15310GJ2010PTC059966

Company & Directors' Information:- J S N MARINE PRIVATE LIMITED [Active] CIN = U74120AP2011PTC075216

Company & Directors' Information:- S I P AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01403WB2012PLC188362

Company & Directors' Information:- S. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15490PN2013PTC146574

Company & Directors' Information:- J J AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15130MH1980PTC023302

Company & Directors' Information:- A R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1992PTC050526

Company & Directors' Information:- G S AGRO INDUSTRIES PVT LTD [Active] CIN = U01132WB1990PTC049960

Company & Directors' Information:- D V AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1993PTC051892

Company & Directors' Information:- C P MARINE PVT LTD [Strike Off] CIN = U74999DL1988PTC032550

Company & Directors' Information:- S S MARINE PVT LTD [Strike Off] CIN = U05005WB1986PTC040175

Company & Directors' Information:- P AND G AGRO INDUSTRIES P LTD [Strike Off] CIN = U99999UP1985PTC007509

Company & Directors' Information:- R. K. G. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100UP2017PTC097391

Company & Directors' Information:- A B M MARINE PRIVATE LIMITED [Active] CIN = U51900GJ2014PTC081341

Company & Directors' Information:- H. N. MARINE PRIVATE LIMITED [Active] CIN = U52609MH2017PTC292333

Company & Directors' Information:- THE KONKAN INDUSTRIES LIMITED [Strike Off] CIN = U15100MH1940PLC003158

Company & Directors' Information:- V G AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01400DL1993PLC051666

Company & Directors' Information:- R B MARINE PVT LTD [Strike Off] CIN = U63090WB1984PTC037362

Company & Directors' Information:- KONKAN MARINE COMPANY PRIVATE LIMITED [Strike Off] CIN = U45202MH1995PTC094835

Company & Directors' Information:- T S AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U15209UP1987PTC008974

Company & Directors' Information:- B AND P AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U01110MH1972PTC015574

Company & Directors' Information:- P V R K AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U01119AP1988PTC008395

Company & Directors' Information:- K R P AGRO INDUSTRIES PVT LTD [Active] CIN = U01110MH1991PTC062304

Company & Directors' Information:- KONKAN AGRO A TO Z PRIVATE LIMITED [Active] CIN = U74120MH2016PTC272952

Company & Directors' Information:- KONKAN AGRO PRIVATE LIMITED [Strike Off] CIN = U15122MH2013PTC248179

Company & Directors' Information:- F. S. MARINE PRIVATE LIMITED [Strike Off] CIN = U74999MH2012PTC235951

Company & Directors' Information:- V V MARINE PRIVATE LIMITED [Active] CIN = U60200PB2020PTC052110

Company & Directors' Information:- AGRO MARINE (INDIA) PVT. LTD. [Strike Off] CIN = U05001TN1986PTC013342

Company & Directors' Information:- MARINE & MARINE PVT LTD [Strike Off] CIN = U51909WB1961PTC025068

Company & Directors' Information:- MARINE INDUSTRIES LIMITED [Dissolved] CIN = U74999KL1951PLC000751

    Final Order Nos. A/89941-89943/2017-WZB/STB in Appeal Nos. ST/169/2012 and ST/89625-89626/2013-Mum

    Decided On, 28 September 2017

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai

    By, THE HONORABLE JUSTICE: RAMESH NAIR
    By, MEMBER AND THE HONORABLE JUSTICE: RAJU
    By, MEMBER

    For Respondents: S.R. Nair, Examiner Officer (AR)



Judgment Text


1. These appeals have been filed by M/s. Konkan Agro Marine Industries Pvt. Ltd. (KAMIPL) against confirmation of demand of Service Tax under Renting of Immovable Property Service and penalties imposed under Finance Act, 1994. Ld. Counsel for the appellant argued that the appellants are engaged in the business of manufacturing and bottling of alcoholic beverages. The appellants hold Potable Liquor License (PLL) and Rectified Sprit License (RS II). The appellants entered into an agreement with M/s. Diageo India Pvt. Ltd. under which the appellants leased their licenses M/s. Diegeo India Pvt. Ltd. The appellants there after entered into an agreement for bottling on behalf of M/s. Diageo India Pvt. Ltd. at their plant and recovered bottling charges for the same. During the period January, 2008 to July, 2008, the appellants allegedly collected the Service Tax amounting to Rs. 18,54,180/- but did not deposit it to the Revenue, consequently the demand under Section 73(1) of the Finance Act, 1994 was raised on them. Ld. Counsel pointed out that the said demand was however dropped by the said Commissioner in the impugned order. Ld. Counsel further pointed out that during the period August, 2008 to July, 2009, the appellants availed credit of Rs. 5,26,344/- while they claim exemption on the bottling service provided to M/s. Diageo India Pvt. Ltd. Consequently demand for reversal of Rs. 26,34,386/- was made against them at the rate of 8% under provisions of Rule 6(3) of Cenvat Credit Rules 2004. The said demand was also dropped by Commissioner vide impugned order.

1.1 The ld. Counsel pointed out that the appellant had recovered lease charges at the rate of Rs. 5,00,000/- per month from M/s. Diageo India Pvt. Ltd. The show cause notice demanded Service Tax on the total amount of Rs. 1,70,00,000/- collected by them on lease charges under the head of renting of immovable property service. The said demand was confirmed by the Commissioner and penalty under Sections 76 and 78 was imposed. The penalty under Section 76 was however restricted to amount collected prior to 10-5-2008. Ld. Counsel argued that what they had rented was not immovable property but the License issued by the State Government for production. Ld. Counsel argued that what they had leased was the license and not the factory premises. He argued that license cannot be treated as immovable property so as to levy Service Tax under the head of Renting of Immovable Property Service. He particularly relied on the definition of immovable property to appearing in the definition of taxable service under Section 65(105)(zzzz). He took us through the provisions of the agreement to assert that the job charges fixed per case were received against manufacture of alcoholic beverages for which the appellant have used their entire Plant, Machinery and Man Power. He pointed out that the fee of Rs. 5,00,000/- per month was received only against the license namely PLL and RS II license on this basis.

1.2 He pointed out that Rs. 5,91,502/- has been demanded as Service Tax for the month of October, 2009 to December, 2009. The appellant had given the details of the amount paid and the challan numbers in their defence reply to the Commissioner. The Commissioner obtain a report from the Assistant Commissioner Service Tax who informed that the said could not be confirmed because of non-submission of complete records by the appellant. Ld. Counsel argued that they had submitted all the records however if there was any doubt the Commissioner could have asked for the said records, he asserted that the entire amount was paid on 6-2-2010.

1.3 The next demand relates to denial of Cenvat credit amounting to Rs. 58,344/- on the ground that the credit has been availed on photocopy of invoices and not on original invoices. Ld. Counsel argued that they had given detailed definitions. In this regards including pointing out that Sr. No. 2 and Sr. No. 30 of the list relates to the same invoice. He further pointed out that they had produced certain invoices in the definitions Commissioner and that fact has been recorded in the impugned order. However Commissioner has not given any finding in respect of the detailed reply given by the appellants and denied the credit.

1.4 Ld. Counsel further raised the issue of limitation.

1.5 Ld. Counsel further pointed out that in respect of appeal No. ST/89625, 89626/13 demand of Rs. 3,09,000/- has been confirmed on the amount of lease and receipt by them in each.

2. Ld. AR pointing out that there cannot be a license without the premises in the provisions of Maharashtra Distillation of Spirit and Manufacture of Potable Liquor Rules, 1966. He argued that the licenses lease along with the factory as license by itself is not value. He also argued that Potable Liquor License (PLL) is a license to manufacture and sell the noted varieties of liquor and the license gives permission only manufacture at the specified premises and nowhere else. He argued that the license is worthless without the factory which has been license. He took us through various provisions of Maharashtra Distillation of Spirit and Manufacture of Potable Liquor Rules, 1966 to ascertain that the licenses has no meaning without the factory and both cannot be delinked in any manner he also argued that license is worthless without the factory and factory is worthless without the license. We have gone through the rival submissions. We find that the appellants have obtained PLL under Maharashtra Distillation of Spirit and Manufacture of Potable Liquor Rules, 1966. The said Rules defined manufactory as under:-

"'Manufactory' means that portion of a distillery premises which is set apart for the manufacture of potable liquor and includes a liquor room and every place therein from which such liquor is issued."
Severe restrictions have been put on the factory, which has been licensed and no charges in the license premises can be made by the licensor without the permission. The said Rules provided for strict conditions of License under Rule 17 thereof. Rule 17 contains as many as 46 Sub-rules requiring the manner in which the license premises and the processes therein are to be operated. Sub-rule (3)(4) of Rule 17 prescribed for unhindered access to the licensing authority.

2.1 A perusal of agreement between the appellant and the M/s. Diageo India Pvt. Ltd. dated 25-9-2006. The following clauses (C)(D)-

"(C) KAM is engaged in the business of manufacture and bottling of alcoholic beverages and has represented to DIAGEO INDIA that it has a fully operational Plant having all Consents and facilities to undertake the process of job contracting the Products, at the Plant. KAM has agreed to and is in the process of carrying out necessary modifications at its Plant to the satisfaction of DIAGEO INDIA to meet the Diageo risk management standards and environmental principles.

(D) KAM has a valid and subsisting manufacturing and related licenses and the Office of Commissioner, State Excise, Maharashtra State and Office of Collector, Aurangabad has respectively granted its approval ('Approval') to KAM to lease its PLL and RSII to Diageo India for a period of 10 years."

Definitions & Interpretation

(n) 'Job Contract/job Contracted//Job Contracting' shall mean and include the entire process of bottling of the Products on job contract basis in accordance with the Specifications to make the Products available for sale, including spirit handling, blending, diluting with DMW, bottling and packaging.

(o) 'Period' shall have the meaning assigned to it under Clause 9.

(p) 'Person' means any individual, sole proprietorship, unincorporated association, unincorporated organization, body corporate, corporation, company, partnership, limited liability company, joint venture, Government authority or trust or any other entity or organization

(q) 'Plant' means the fully functional plant owned by KAM and situated at Gangapur Village, Aurangabad, where the Products are to be Job Contracted."

2.2 Maharashtra Distillation of Spirit and Manufacture of Potable Liquor Rules, 1966 permit transfer of licence from one name to another in terms of Rule 4-C and 16-3 similarly in terms of Rule 4-D 16-4 the said Rule permits transfer of licence from one side to another Rule 15 of the said Rules reads as under:

"Grant of licence. - (1) Any persons desiring to manufacture potable liquor shall make an application in Form P.L.A. accompanied by a challan evidencing payment of an application fee of five hundred rupees for a licence in that behalf to the State Government through the Commissioner. The application shall be accompanied by a plan in quadruplicate containing a full description of the premises and material utensils, implements or apparatus required for manufacturing such liquor. The applicant shall also submit with the application four signed copies of a statement explaining the process which he desires to adopt for manufacturing each kind of potable liquor. On receipt of an application, the Commissioner shall forward it to the State Government with his recommendations thereon."
From the above provisions, it is apparent that though licence is granted in respect of manufactory but the same is granted to the person. The licence given to a person in respect of a manufactory can be transferred to another manufactory on another site in the name of same person in terms of Rule 4-D & 16-4 of the said Rules. In view of above, it is apparent that while the licence is granted in respect of the manufactory it is not granted to the manufactory but to the person. In these circumstances, it is possible for a person to give on lease the licence while keeping the manufactory in his control. In this regard Rule 3 of the said Rules becomes relevant. The said Rule 3 reads as under:

"3. Grant of distillery licence. - (1) Any person desiring to construct and work a distillery for the manufacture of spirit shall make an application for a licence in that behalf to the State Government through the Commissioner. The application shall be accompanied by a challan evidencing payment having been made in the Government Treasury of an application fee of five hundred rupees contain the following particulars, that is to say"-

(i) the name and address of the applicant;

(ii) the place where the distillery is to be constructed and worked;

(iii) the description and plan in quadruplicate of the proposed distillery;

(iv) a statement, in quadruplicate, specifying the number, size, description and capacity of vessels for storing wash or spirit including receivers, and other apparatus as are proposed to be used in working the distillery;

(v) a statement, in quadruplicate, specifying the make and capacity of the still proposed to be erected and used, in working the distillery.

(2) The application shall be accompanied by an undertaking to the effect that the applicant shall abide by the provisions of the Act and the rules, regul

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ations and orders made thereunder and the conditions of the licence. (3) On receipt of an application and after making such inquiries for verification of the details stated in the application as also such other inquiries as he may deem necessary, the Commissioner shall forward the application to the State Government with his remarks. The State Government may, if it is satisfied that the applicant is likely to abide by the provisions of the Act and the rules, regulations and orders made thereunder and conditions of the licence and further that there is no objection to granting the licence applied for, grant the applicant a licence in Form 'I' on payment of a licence fee (inclusive of consideration) at the rates given in the Table below or may after recording its reasons, refuse to grant the licence, and inform the Commissioner of the decision: From the said Rule it is apparent that licence can be granted even before the manufactory comes into existence. From the above Rules it is apparent that licence by itself is not a immovable property and therefore leasing of licence cannot be treated as renting of immovable property service. In view of above, we find merit in the appeal and the same is therefore allowed.
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