SIGNODE INDIA LIMITED versus COMMR.OF CEN. EXCISE & CUSTOMS - II
[2017] 6 S.C.R. 997, Supreme Court of India, 2017
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
[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 
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the word packing is included therein, the same is referable to
SIGNODE INDIA LIMITED v. COMMR. OF CEN. EXCISE & 
999 
CUSTOMS-II 
the word "Cargo" whereas in Section 65(76b) "Packing Activity" 
A 
is defined to mean "Packaging of Goods". [Para 8] [1002-B] 
2.3 The distinction between the two expressions, namely, 
"cargo" and "goods" in the two different provisions of the Act 
becomes evident if cargo is understood to denote goods which 
are ready for transportation whereas packaging of goods is a stage 
B 
prior i.e. before they became cargo and in fact on completion of 
such packaging the goods become cargo. 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. [Paras 9, 10] [1002-C-F] 
3. In a Circular issued by the Central Board of Excise and 
Customs, services liable to tax under the category of "cargo 
handling services", has been clarified to mean services provided 
c 
by cargo handling agencies which is, in effect what Section 65(zr) 
provides for. Clause 3, makes the position abundantly clear that 
even the department had understood services provided by Cargo D 
handling agencies undertaking the activities of packing, 
unpacking, loading and unloading of goods meant to be 
transported by any means of transportation, namely truck, rail, 
ship or aircraft as services liable to tax as "cargo handling 
services". Clause 3.2 of the circular makes it clear that mere 
transportation of goods is not
covered in the category of cargo 
handling. Clause 15 of the circular also makes it clear that an 
individual undertaking the activity of loading or unloading the 
cargo would not be liable to pay service tax on such activity as 
being an activity undertaken by a cargo handling agency.All activity 
undertaken by the appellant, though related to packing activity, 
E 
F 
is at a stage when the goods are yet to clear the factory gate as 
manufactured goods for onward transportation. The appellant 
would not be liable to pay service tax on the service rendered by 
it in terms of Section 65(23) read with Section 65(105)(zr) of the 
Act. [Paras 12-15] [1002-F-G; 1003-A-F] 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6038-
6039 of 2007. 
From the Judgment and Order No. A-1570 & 1572/KOL/07 dated 
10.08.2007 of the Customs, Excise & Service Tax Appellate Tribunal, 
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Kolkata in Service Tax Appeals No. EDM-806/04 and EDM-06/06. 
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1000 
A 
B 
c 
D 
E 
F 
SUPREME COURT REPORTS 
[2017] 6 S.C.R. 
V. Lakshmikumaran, Yogendra Aldak, Karan Sachdev, M. P. 
Devanath, Kartik Kurmy, Praveen Kumar, S. B. Sharma, Ashok Anand, 
Advs. for the Appellant. 
K. Radhakrishna, Sr. Adv:, Ms. Nisha Bagchi, Ms. B. Sunita Rao, 
Ms. Pooja Sharma, B. V. Balaram Das, Arind Kumar Sharma, Advs. 
for the Respondent. 
The Judgment of the Court was delivered by 
RANJAN GOGOi, J. 1. Heard learned counsels for the parties 
and perused the relevant material. 
2. The liability of the appellant to service tax on the basis that the 
service rendered by the appellant amounts to "cargo handling service" 
within the meaning of Section 2(23) of the Finance Act, 1994 [as amended 
by Finance (No.2) Act, 2004] is the core issue that arises for 
determination in these cases. 
3. The appellant seeks to disclaim such liability by contending that 
the service rendered by it amounts to a "packaging activity" which has 
made exigible to service tax by amendment to the Finance Act, 1994 
and by insertion of Section 65 (76b) and Section 105(zzzf) with effect 
from 16.06.2005. The appellant has been paying service tax on the 
aforesaid basis i.e. service rendered by it amounts to a packaging activity 
and no dispute on this score has been raised by the Revenue. 
4. The appellants though granted the facility of centralized 
registration with effect from 10.10.2004 have been found to be liable to 
pay service tax on its activity by the Kolkata Bench of the
Customs, 
Excise, Service Tax Appellate Tribunal (for short, 'the Tribunal') for the 
period prior to 2005, whereas in respect of the very same activity it has 
been found to be not so liable by the Bangalore Bench of the learned 
Tribunal, which order has since been affirmed by the High Court of 
Andhra Pradesh being the jurisdictional High Court in respect of the /is 
decided by the Bangalore Bench of the learned Tribunal. 
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5. To appreciate the issues arising in the present case, Section 
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65(23) which defines "cargo handling service"; Section 65(1 OS)(zr) which 
deals with the "taxable service rendered by a cargo handling agency"; 
Section 65 (76b) which defines "packaging activity" and Section 
65(105)(zzzf) which makes "service rendered in connection with 
packaging activity" exigible to the s~rvice needs to be extracted below:-
SIGNODE INDIA LIMITED v. COMMR. OF CEN. EXCISE & 
1001 
CUSTOMS-II 
"Section 65-In this Chapter, unless the context otherwise requires:-
A 
(23) "cargo handling service" means loading, unloading, packing 
or unpacking of cargo and includes cargo handling services 
provided for freight in special containers or for non-containerised 
freight, services provided by a container freight terminal or any 
other freight terminal, for all modes of transport and cargo handling 
B 
service incidental to freight, but does not include handling of export 
cargo or passenger baggage or mere transportation of goods; 
(76b) "packaging activity" means packaging of goods including 
pouch filling, bottling, labelling or imprinting of the package, but 
does not include any packaging activity that amounts to c 
"manufacture" within the meaning of clause (t) of Section 2 of 
the Central Excise Act, 1944. 
Section 105 - "taxable service" means any service provided or to 
be provided:-
(zr) to any person, by a cargo handling agency in relation to cargo 
D 
handling services; 
(zzzf) to any person, by any other person, in relation to packaging 
activity." 
6. Sections 65(76b) and 65(105)(zzzt) were both inserted by the 
Finance Act, 2005 with effect from 16.06.2005. The above amendment, 
to our mind, is sufficiently indicative oflegislative intent 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, forthe post amendment 
period, on the basis that the appellant is engaged in "packaging activity" 
has not been disputed by the Revenue. 
E 
F 
7. At this stage notice must also be had of the fact that there is no 
dispute on the fact that the liability sought to be fastened on the appellant 
G 
is on account of the activity undertaken by the appellant in the 
manufacturing unit of the principal manufacturer, namely, Tata 
Refractories Limited. 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 
H
1002 
SUPREME COURT REPORTS 
[2017] 6 S.C.R. 
A 
manufactured goods of the principal manufacturer, namely, Tata 
Refractories Limited. In such a situation, we will really have to discern 
what is the distinction between the two expressions "Cargo Handling 
Service" and "Packaging Activity", as defined in the respective provisions 
of the Act. 
B 
8. A careful reading of Section 65(23) of the Act, which defines 
c 
D 
E 
F 
G 
H 
Cargo Handling Service would go to show that though the word packing · 
is included therein, the same is referable to the word "Cargo" whereas 
in Section 65(76b) "Packing Activity" is defined to mean "Packaging of 
Goods''. 
9. The distinction between the two expressions, namely, "cargo" 
and "goods" in the two different provisions of the Act becomes evident 
if cargo is understood to denote goods which are ready for transportation 
whereas packaging of goods is a stage prior i.e. before they became 
cargo and in fact on completion of such packaging the goods become 
cargo. The position becomes more clear if the dictionary meaning of the 
word "cargo" is taken into account, as set out below: 
As per Black' Law Dictionary, the word "cargo" means "Goods 
transported by a vessel, airplane, or vehicle; According to Oxford 
Dictionary of English, "cargo" means goods carded on a ship, 
aircraft, or niotorvehicle and as per Websters Comprehensive 
Dictionary, "cargo" is Goods and merchandise taken on board 
a vessel. 
I 0. 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. 
11. There is yet another aspect of the case which would require a 
mention. In a Circular bearing F.No.B. J 1/1/2002-TRU dated 01.08.2002 
issued by the Central Board of Excise and Customs, services liable to 
tax under the category of "cargo handling services", has been clarified 
to mean services provided by cargo handling agencies which is, in effect 
what Section I OS(zr) provides for. 
12. Clause 3 of the circular is in the following terms: 
"3. The services which are liable to tax under this category are 
the services provided by cargo handling agencies who undertake 
the activity of packing, unpacking, loading and unloading of goods
SIGNODE INDIA LIMITED v. COMMR. OF CEN. EXCISE & 
1003 
CUSTOMS-II 
meant to be transported by any means of transportatiop namely 
A 
truck, rail, ship or aircraft. Well known examples of cargo handling 
service or services provided in relation to cargo handling by the 
Container Corporation oflndia, Airport Authority oflndia, Inland 
Container Depot, Container Freight Stations. This is only an 
illustrative list. There are several other firms that are engaged in 
8 
the business of cargo handling services."_ 
. 
Clause 3, extracted above, makes the position abundantly clear 
that even the department had understood services provided by Cargo 
handling agencies undertaking the activities of packing, unpacking, loading 
and unloading of goods meant to be transported by any means of 
transportation, namely truck, rail, ship or aircraft as services liable to tax 
C 
as "cargo handling services". 
13. Clause 3 .2 of the circular makes it clear that mere 
transportation of goods is not covered in the category of cargo handling. 
Clause 15 of the circular also makes it clear that an individual undertaking 
0 
the activity ofloading or unloading the cargo would not be liable to pay 
service tax on such activity as being an activity undertaken by a cargo 
handling agency. 
14. It is nobody's case before us that the appellant is a cargo 
handling agency. All activity undertaken by the appellant, though related 
E 
to packing activity, is at a stage when the goods are yet to clear the
factory gate as manufactured goods for onward transportation. 
15. In the light of the discussions that have preceded, we are of 
the view that prior to the amendment made by the Finance Act of 2005 
with effect from 16.06.2005, the appellant would not be liable to pay 
F 
service tax on the service rendered by it in terms of Section 65(23) read 
with Section 105(zr) of the Act. 
· 
16. The demand raised on the appellant may be understood in the 
aforesaid light and all reliefs as may be due in terms of the above be 
granted forthwith. 
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17. The appeals, consequently, are allowed and the order of the 
Tribunal is set aside. 
Ankit Gyan 
Appeals allowed.