Custom, Excise & Service Tax Tribunal
M/S. Style Cell vs The Commissioner Of Central Excise ... on 25 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: ST/95/2005 (Arising out of Order-in-Appeal No: 173/2005 CE dated 08.09.2005 passed by the Commissioner of Central Excise (Appeals), Mangalore.) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Style Cell Appellant Vs. The Commissioner of Central Excise (Appeals) Mangalore. Respondent
Appearance Shri Ganapathi Hedge and A. C. Hyuth Ajit Kumar, Advocates for the appellants.
Shri K. Sambi Reddi, Authorised Representative (JDR) for the Revenue.
CORAM DR. S.L. PEERAN, HONBLE MEMBER (JUDICIAL) Date of Hearing: 25.01.2008 Date of decision: 25.01.2008 ORDER No._______________________2008 Per Dr. S. L. Peeran (Oral) This appeal arises from Order-in-Appeal No.173/2005 CE dated 8.9.2005 by which the appellants activity of purchasing goods from M/s. ITC Ltd. and selling them at the price fixed by ITC Ltd. has been considered to be coming under the category of Consignment Agent, as the assessee did not take registration certificate nor paid the Service Tax, demands were issued and confirmed along with like-sum as penalty besides penalties under various Sections of Finance Act, 1994. The appellant contended that they were not carrying on the activity of Consignment Agent or that of Clearing and Forwarding Agent. They were in fact receiving the goods from M/s. ITC Ltd. by invoices. They maintain their own books of accounts and they were independent dealer registered under the Sales Tax Act. They were selling the goods at the rates fixed by the M/s. ITC Ltd and were getting their commission and therefore, their activity is not that of selling the goods from premises and delivering it to the consignor, as that is a requirement for bringing them under the Consignment Agent. The goods were lifted from M/s. ITC Ltd. by them under an agreement for the purpose of sale and then, the purchasers were identified by them and goods were sold. On the basis of the stock, the customers were directly coming to purchase the goods from them and they were invoicing the same and paid Sales Tax. Therefore, the activity in terms of the definition of Clearing and Forwarding Agent or Consignment Agent does not come within the ambit of Finance Act. They contended that Section 65 (25) of the Finance Act defines a Clearing and Forwarding Agent as follows:
Clearing and Forwarding Agent means any person who is engaged in providing any service either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent.
2. They contended that the essential requisites emanating from the definition are as follows:
* The provider and receiver of the service must be any person.
* The person must be engaged in providing any service.
* The service may be provided directly or indirectly.
* The service must be connected with specified operations.
* The specified operations are clearing and forwarding of goods.
* The service must be provided to another person in any manner.
* A consignment agent is also treated as a clearing and forwarding agent.
2.1 They pointed out that all the above ingredients were not present. They pointed out that M/s. ITC Ltd. was in the position of a seller of goods and they were in the category of purchasers of goods and the Sale of Goods Act would apply and as such Sales Tax was being collected on that account. Their pleas have been negatived on the basis of the definition of Blacks Laws Dictionary of Consignment Sale. The Commissioner has taken a different view that they would come within the ambit of Clearing and Forwarding Agent. This has been challenged by the appellants.
3. The learned JDR relied on the few rulings, which are challenged by the learned Counsel by relying on the ruling of the Ahmedabad Bench in the case of CCE Vs. Parekh Apparels dated 25.10.2007 wherein in an identical facts and circumstances, the appeal of the Revenue was dismissed. The Respondents therein had an identical agreement with M/s. ITC Ltd and the Bench held that the activity of selling the goods at the retail price specified by the principal M/s. ITC Ltd. cannot be considered to come within the ambit of C & F Agent. The findings recorded in Para 4 is reproduced herein below.
4. The revenue in their grounds of appeal have themselves observed that M/s. ITC Ltd. has appointed the respondent as consignment agent for stocking, display, and sale exclusively from the showroom of the consignor branded apparel. It is also admitted in the appeal memo, that the respondent is to sell the goods at the retail price for a commission of 2%. There is no denial to the fact that such sales is under the respondents invoices and can be to any person. The larger Bench of the Tribunal in the case of Larsen & Toubro Ltd. Vs. CCE, Chennai 2006 (3) STR 321 (Tribunal.-LB) has held that commission agent is not covered by the definition of clearing and forwarding agent services. Clearing and forwarding agents forward the goods on behalf of the principal t the customer directed by the principal only and are not free to sell the same to any person. This is not the case here. Merely because the ownership of the apparels does not pass on the respondent does not mean that respondent becomes the clearing and forwarding agents. The scope of the said service stands clarified by the Board and various circulars of the Commissionerates. Reference may be made to Mumbai Commissionerates Trade Notice No.59/99 dated 4.10.99 which we would like to reproduce below:
Normally there is a contract between the principal and the clearing and forwarding agent detailing the terms and conditions and also indicating the commission or remuneration to which the clearing and forwarding agent is entitled. A clearing and forwarding agent normally undertakes the following activities-
a) Receiving the goods from the factories or premises of the principal or his agents,
b) Warehousing these goods,
c) Receiving dispatch orders from the principal,
d) Arranging dispatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal,
e) Maintaining records of the receipt and dispatch of goods and the available at the warehouse,
f) Preparing invoices on behalf of the principal.
As is clear from the above that C & F agent normally receives the dispatch order from the principal and arranges dispatch of the goods as per the direction of the principal and prepares invoices on behalf of the principal. All these factors are missing in the present case. The respondent is merely a shopkeeper who is selling the goods to M/s. ITC Ltd. under his invoice. We do not find any infirmity in the view taken by the Commissioner (Appeals). Accordingly, the appeal filed by the revenue is rejected.
4. The learned Counsel also relied on MTR Foods Ltd. Vs. CST vide order dated 27.7.2007 rendered by this bench wherein in an identical circumstances it was held that the sale of goods by MTR cannot be brought within the ambit of Consignment Agent. The Bench applied the ratio of the ruling rendered in the case of CCE Vs. Transasia Sales Syndicate, Bangalore vide Final order No.848/2007 dated 31.7.2007 and that of Larsen and Toubro Ltd. Vs. CCE, Chennai - 2006 (3) STR 321 (T-LB). He also relied on Zaveri Patel Vs. CC & CE vide Final Order dated 27.7.2007 rendered by this bench wherein also similar issue of procuring or booking of orders for the principal by an agent on payment of commission basis was held to be not coming within the category of C & F Agent. Numbers of similar orders were cited by the learned Counsels.
5. The learned JDR again reiterated his plea that the appellants have to be treated as Clearing and Forwarding Agent or Consignment Agent in terms of the agreement entered into with the ITC Ltd. He relies on the following judgments which are as follows.
5.1 In the case Vijay Enterprises Vs. CCE, Belgaum 2007 (7) STR 339 (Tribunal.-Bang.), the question of refund was considered in respect of C & F Agent and refund was rejected.
5.2 In the case of CCE, Chandigarh Vs. ADH Agency - 2007 (7) STR 660 (Tribunal.-Del.), the respondent was a consignment stockist. He was concerned with safe delivery of goods and he was not selling the goods. Therefore, this judgment is distinguishable.
5.3 In the case of CCE, Jaipur Vs. Chopra Brothers - 2005 (186) ELT 381 (Tri.-Del.), the activity of the assessee is receiving tea from tea company/wholesale dealers was considered as consignment agent and the same was considered as an activity coming within the ambit of Clearing and Forwarding Agent.
5.4 In the case of Super Poly Fabrics Ltd. Vs. CCE, Ludhiana - 2006 (4) STR 595 (Tri.-Del.) wherein also the activity was that of a consignment stockist, hence, this is also distinguishable.
5.5 In the case of Medpro Pharma Pvt. Ltd. Vs. CCE, Chennai -2006 (3) STR 355 (Tri.-LB), a similar situation arose and therefore, the activity was considered as freight forwarders. The activity of freight forwarders was considered to come within the activity of Clearing and Forwarding Agent. This is also distinguishable.
5.6 In the case of CCE, Chandigarh Vs. Adhunik Steels Ltd. - 2006 (4) STR 542 (Tri.-Del.), the assessee was handling rejected/scrap materials and therefore, they were considered to come within the Clearing and Forwarding Agent.
6. All these judgments cited by the learned JDR are distinguishable, while the one cited by the learned Counsel clearly applies to the facts of the case. The appellants have been covered under Sale of Goods Act for the purpose of levy of Sales Tax. They have sold the goods on behalf of the principal as an Agent and their activity involved selling the goods to the purchasers and they were not handing the goods to come within the category of Clearing and Forwarding agent or as a consignment agent. Therefore, the impugned order is not legal and proper in the light of the citations given by the learned Counsels. The citations given by learned JDR are distinguishable. The impugned order is set aside and the appeal is allowed with consequential relief.
(Pronounced and dictated in open Court) (S.L.PEERAN) Member (J) //rv// ??
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