Custom, Excise & Service Tax Tribunal
Whether Press Reporters May Be Allowed ... vs Commissioner Of Central Excise And ... on 26 September, 2012
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
1)SERVICE TAX APPEAL NO.ST/178/08
2)SERVICE TAX APPEAL NO.ST/188/08
3)SERVICE TAX APPEAL NO.ST/189/08
(ARISING OUT OF THE FOLLOWING ORDERs:-
FOR SL.NO.(1):ORDER-IN-ORIGINAL NO.15-16/ST/AYUKT/08 DATED 26.06.2008 PASSED BY COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, PATNA;
FOR SL.NOs.(2&3):ORDER-IN-APPEAL NO.102-103/PAT/STAX/APPEAL/2008 DATED 31.07.2008 PASSED BY COMMISSIONER(APPEALS), CUSTOMS, CENTRAL EXCISE & S.TAX, PATNA)
FOR APPROVAL AND SIGNATURE OF
SHRI S.K.GAULE, HONBLE TECHNICAL MEMBER
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
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 ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
1&2) M/S. UNITED ENTERPRISES
3) SHRI ATUL KUMAR JAIN, MD
APPELLANT (S)
VERSUS
COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, PATNA
RESPONDENT (S)
APPEARANCE:
SHRI N.K.CHOWDHURY,ADVOCATE FOR THE APPELLANT(S);
SHRI S.MISRA, A.R.(ADDL. COMMR.) FOR THE REVENUE.
CORAM:
SHRI S.K.GAULE, HONBLE TECHNICAL MEMBER DR. D.M.MISRA, HONBLE JUDICIAL MEMBER Date of Hearing:23.05.2012 Date of Order:26.09.2012 ORDER NO..
Per Dr. D.M.Misra These Appeals involve common a issue, accordingly, taken up together for disposal. But, since developments of facts are marginally different , same are narrated appeal wise.
APPEAL NOs.ST-188-189/08:
2. Briefly stated, pursuant to an agreement dt.30.03.2001 with M/s SAIL, the Appellants had registered and paid service tax under the category of Storage and Warehousing services for the year 2001-02 and part of 2002-03. But, later as they discontinued payment of Service Tax, consequently, their premises were visited by the Officers from DGCEI and proceedings were initiated against them for recovery of Service Tax. A Show Cause cum Demand Notice was issued to them on 21.02.2005 alleging that since they were the consignment agent of M/s. SAIL and rendered services under the category of Clearing and Forwarding Agent, accordingly, liable to pay service tax of Rs.27,45,920/- for the period 2001-02 to 2003-04. The demand was later confirmed by the Additional Commissioner and penalty of Rs.35,00,000/- under Section 78 , penalty under Section 76 @Rs.200/- per day or 2% of such Tax per month, whichever is higher and penalty of Rs.5000/- under Section 75A of the Finance Act,1994 were imposed on them. Besides, personal penalty of Rs.1,00,000/- under Section 81 of the Finance Act,1994 on Shri Atul Kumar Jain, Managing Director of the Appellant. Aggrieved, the Appellants filed appeals before the Commissioner(Appeals), who vide his Order-in-Appeal No.102-103/Pat/STax/Appeal/2008 dated 31.07.2008 has upheld the Order of the Adjudicating Authority. Hence the present Appeals.
APPEAL NO.ST-178/08
3. Briefly, in this case, as the Appellant failed to pay service tax under the category of Clearing and Forwarding Agent services, even though they continued to act as Consignment Agent under the Agreement dt.30.03.2001 with M/s. SAIL and rendered the service of a Clearing & Forwarding Agent, show cause cum demand notice dated 05.02.2008, demanding Service Tax of Rs.4,24,868/- for the period from 01.04.2004 to 09.09.2004 and Rs.57,09,767/- for the period from 10.09.2004 to 30.09.2006 was issued. Another demand notice on the same ground was also issued to the Appellant on 26.02.2008 for recovery of Service Tax on the aforesaid services amounting to Rs.11,65,824/- for the period from 01.10.2006 to 31.03.2007. The said notices were adjudicated by the learned Commissioner of Central Excise & Service Tax vide Order-in-Original No.15-16/ST/Ayukt/2008 dated 26.06.2008 who confirmed the demands and impoed penalties under various provisions of Finance Act,1994. Aggrieved by the said Order, the Appellant filed the present Appeal.
4. The Ld. Advocate for the Appellants has submitted that the Appellant company, M/s United Enterprises was rendering services viz. transportation of iron and steel products from Fatuha Rail Goods Shed to Banka Ghat Stockyard, wherefrom, the importers of such goods from Nepal could collect the said goods. The said services were rendered to M/s. SAIL as per the Agreement dt. 30.03.2001. He has further submitted that for export of said goods to Nepal, a procedure was prescribed by the CBEC in its Circular dated 16.11.1998. Pursuant to the said Circular, M/s SAIL filed necessary intimation with the jurisdictional Commissioner through letter dated 18.04.2001 to avail the benefit of said procedure. Also, M/s. SAIL floated tenders for carrying out the work of handling of iron and steel products at their said Stockyard, and consequently, the Appellant was appointed as consignment Agent by M/s. SAIL under the said Agreement dated 30.03.2001. He has submitted that precisely, as per the agreement dt.30.03.2001, the Appellant were required to render the following services mentioned at the Schedule of Operations and Rates annexed to the said Agreement:
unloading of materials at Danapur/Fatuha or any other nearest operating Public Siding, transportation of materials and unloading at Consignment Yard in the appointed place. Stacking (incl. Marking/Painting) of materials as per stacking plan/storage guidelines and loading into customers Vehicles for delivery with weighment and necessary documentation.
5. He has submitted that the Appellant Firm was accordingly raising invoices for unloading, transportation and loading of the export consignment in the respective trucks. It is his submission that they were neither clearing the goods from the factory of M/s. SAIL nor forwarding the goods to anybody else. They carried out the activity of transshipment of the goods meant for export. For the said activity, they were registered initially with the Department on 18.09.2002 under category of Storage and Warehousing services, but subsequently on being advised that they were not liable to pay Service Tax, since their activities were permissibly covered under Cargo Handling Services and related to handling of export cargo, they submitted a letter dated 28.12.2004 for cancellation of the registration and thereafter, stopped making payment of the Service Tax.
6. The Ld. Advocate further submitted that the Appellants were, thereafter, issued with show cause notices. The first show cause notice was issued to them for the period from April, 2001 to March, 2004 demanding a duty of Rs.27,45,920/- on 21.02.2005 invoking extended period limitation. The second show cause notice was issued on 05.02.2008 for the period from April, 2004 to September, 2006 demanding an amount of Rs.61,34,690/- and the third show cause notice was issued on 26.02.2008 for the period from October, 2006 to March, 2007 demanding an amount of Rs.11,65,824/-. He has submitted that all these notices were replied by them contending, inter alia, that M/s. SAIL had been exporting the goods without payment of Central Excise Duty under freely convertible currency and the goods handled by the Appellants were nothing but export cargo and the activities of the Appellants cannot be considered as Clearing and Forwarding Agent even though the Appellant was appointed as consignment agent in the said Agreement by M/s SAIL. Their activities, on other hand, fall under the category of cargo handling service.
7. The Ld Advocate contended that mere mentioning the Appellant as Consignment Agent in the Agreement, ipso facto, cannot be the criterion for classifying the activities under the heading C & F Agents for the purpose of Service Tax. It is the intention, purpose and activities rendered by the Appellants, are alone relevant, i.e. handling of export cargo, namely, unloading, transportation and loading of the goods for export to Nepal. He has contended that the Appellant was handling the goods covered by the export documents and their activities were more appropriately classifiable under Cargo Handling Services than as C&F Agents. He has referred to the decision of the Honble Apex Court in the case of Deputy Chief Controller of I&E, New Delhi vs. T.K.Koshalram reported in 1999(110)ELT 366(SC). Further, he has submitted that the activity of Consignment Agent does not come under the purview of Clearing and Forwarding Agent. In support, he has referred to the decisions of the Tribunal in the case of Mahabir & Generics reported in 2004(170)ELT 78(Tri-Del); Trade Take Corporation reported in 2005(186)ELT 227(Tri-Mum); Siddhart Polymer reported in 2007(7) STR 472 (Tri-Bang), Trans Asea Sales Syndicate reported in 2007 (8) STR467. Further, distinguishing the judgment of Honble Karnataka High Court in the case Mahaveer & Generics reported in 2010(17) STR 225(Kar.),he has submitted that the same is not applicable to their case. Further, he has submitted that by providing the service of export cargo handling, they are not liable to pay Service Tax. He has referred to another decision of the Tribunal in the case of Konkon Merine Agency reported in 2007(8)STR 472(Tri-Bang.) and 209(13) STR 7 (Kar).
8. The Ld Advocate has contended that similar activities undertaken by one M/s. Arpit Enterprises were classified under the category of Cargo Handling Services. Further, he has submitted that the demand is barred by limitation as all the facts were within the knowledge of the department and hence no suppression or mis-declaration could be alleged against the Appellants. He has submitted that initially the activities were classified under storage and warehousing services and after certain period, the Appellants stopped making payments and requested for cancellation of the registration certificate, since the activities were covered by Cargo Handling Services and handling of export cargo does not attract Service Tax. Therefore, in regard to the first show cause notice dated 21.02.2005 issued for the period from April, 2001 to March, 2004, he submitted that the maximum period is barred by limitation; the demand from 21.02.2004 at best could be maintainable and the rest period is barred by limitation. Further, he has submitted that the second show cause notice issued on 05.02.2008 and the third show cause notice issued on 26.02.2008, are entirely barred by limitation. In support of his contention, he has referred to the judgements of the Honble Apex Court in the case of Larsen & Tubro Ltd. reported in 2007(211) ELT 513(SC), Hyderabad Polymers Ltd. reported in 2004(166) ELT 151(SC), Nizam Sugar Factory reported in 2006(197) ELT 465; and of the Honble High Court of Punjab and Haryana in the case of Escorts Ltd. reported in 2009(235) ELT 55(P&H). Further, he has submitted that the show cause-cum-demand notices were only proposing the classification and then raising the demand. It is his submission that without finalization of the classification, the demand cannot be raised.
9. On behalf of the second Appellant, Shri Atul Kumar Jain, Managing Director, he has submitted that the issue involved in the present case is classification of services and there is no finding against the Director involving himself personally in short payment of duty, hence, imposition of personal penalty on the Managing Director, Shri Jain is unwarranted and bad in law.
10. Per contra, Learned AR(Addl. Commissioner) appearing for the Revenue has submitted M/s. SAIL had entered into an agreement with the Appellant on 30.03.2001 appointing them as a consignment agent for storage and movement of their Iron & steel products . He has submitted that in the said agreement, it has been clearly stipulated that the Appellant would act as a consignment agent for M/s. SAIL in receiving, storing and transportation of goods meant for export to Nepal. Learned AR submitted that a plain reading of the said agreement along with the bills raised by the Appellant for the services rendered to M/s SAIL , it would be clear that the Appellant are not merely providing cargo handling service, but also rendering the service as a clearing and forwarding agent. In this connection, he has referred to the Circular No.B-43/7/97-TRU dt.11.07.1997 issued by CBEC and the Trade Notice No.59/99 dated 04.10.99 issued by the Mumbai-I Commissionerate,. He has referred to para 2.2 of the Boards Circular where broad outlines of the services normally rendered by a Clearing & Forwarding Agent is enumerated. He has submitted that activities mentioned in the said Circular are more or less similar to the services rendered by the Appellant in the capacity of consignment agent to M/s SAIL. .
11. He has submitted that this Circular and subsequent Trade Notices issued by various Commissionerates have been referred and accepted in almost in every judgement delivered by the Tribunal and the Courts on the subject. He has submitted that the services rendered by the Appellant squarely fall under the scope of the definition of C & F Agent services listed in the aforesaid Circular. The Ld. A.R further submitted the present facts and circumstances of the case are almost similar to the facts of the case decided by the Honble High Court in the case of Commissioner of C.Ex.,Banglaore Vs. Mahaveer Generics 2010 (17) S.T.R 225 (Kar.) wherein their Lordships had observed that the service of a consignment Agent falls under the category of C & F Agents. He has submitted that the judgments cited by the Ld Advocate for the Appellant are delivered following the ratio of Tribunal in Mahaveer Generics case which stands overruled by the Honble Karnataka High Court and hence not applicable to the present case.
12. Further, the Ld A.R. has submitted that the claim of the Appellant that the services rendered by them are in relation to the export of goods to Nepal and hence, ought to be exempted from payment of Service Tax, cannot be accepted as the goods are manufactured and exported by M/s. SAIL and any benefit in relation to the export of such goods, including the service tax paid by its consignment agent, accrues to M/s. SAIL and whatever Service Tax is required to be paid during the course of transit of such goods to Nepal by any other agency, is required to be discharged.
13. On the issue of limitation, the Ld. A.R. has submitted that the fact of rendering such service was initially not disclosed to the Department, resulting into intervention of DGCEI and issuance of a show cause notice in 2005. The subsequent two show cause notices were issued in 2008 because of the non-co-operation and non-supply of the relevant date by the Appellant. The Appellant had purposely with intention to evade payment of duty, concealed the data from the Department, resulting in the delay in issuance of the show cause notice. Besides, the Appellant had been claiming that their services were related to export of cargo and the proceeds of sale were received in convertible foreign currency. Whereas on investigation it was found that the sale proceeds were received in Indian currencey.In these circumstances, the learned Adjudicating Authority and the learned Commissioner (Appeals) have rightly confirmed the demand invoking extended period of limitation against the Appellant. Further, he has submitted that the personal penalty is liable to be imposed on the Appellant, Shri Atul Kumar Jain, as he had knowingly concealed all the facts from the knowledge of the Department and not furnished the relevant data of receipt of the taxable services from M/s. SAIL in time, resulting in the delay in issuance of the show cause notices, an attempt to evade payment of Service tax.
14. We have carefully considered the rival submissions and perused the records. The issue involved in these Appeals relates to classification of services rendered by the Appellant to M/s. SAIL as per the agreement dt.30.03.2001. It is the claim of the Appellant that the services rendered by them fall under the category of Cargo Handling Service and since it relates to export of cargo, therefore, they were not required to pay Service Tax during the period in question. On the other hand, Revenue issued three demand notices for different periods, classifying their services under the category of Clearing and Forwarding Agent. Before proceeding to analyse the definitions of these services and their applicability to the facts of the present case, it is necessary to state the same as were in force during the relevant period.
15. The Cargo Handling Service is defined under Section 65(23) of the Finance Act, 1994. The said service has been made taxable under Section65( 105)(zr) of Finance Act,1994 w.e.f.16.08.2002. It reads as follows:-
Cargo Handling Services Service defined u/s 65(23) of the Finance Act, 1994 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 services incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods.
16. Service rendered by Clearing and Forwarding Agent has been levied to service tax under Section 65(105)(j) of Finance Act,1994 w.e.f. 16.7.1997 and it is defined at Section 65(25) of the Finance Act, 1994, reads as follows:-
Clearing & Forwarding Agents Service Provider defined u/s 65(25) of the Finance Act, 1994 Clearing & 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.
17. Undisputedly, by an Agreement dated 30.03.2001, the Appellant had been appointed as a Consignment Agent by M/s. SAIL. The terms and conditions as mentioned in the said Agreement and relevant to the present issue reads as below:-
In consideration of the payments to be made by the Company in terms of the contract, the Consignment Agent convenants and agrees with Company to undertake the job of operating a Consignment Agency Yard involving transportation, handling and storage of Iron & Steel materials at Banka Ghat, Patna on the terms and conditions as also in the manner required and the Consignment Agent agrees to do and conform strictly all such acts, works or jobs as are mentioned in the various annexures referred in hereunder.
18. Further, in the annexure-3G to the said agreement, detailed schedule of operations and applicable rates are stipulates as follows:
Sl. No. Description of Work Steel
1.
Unloading of materials at the DANAPUR/FATUHA or any other nearest operating Public Siding, transportation of materials and unloading at CA Yard in the appointed place. Stacking (incl. Marking/Painting) of materials as per stacking plan/storage guidelines and Loading into Customers Vehicles for delivery with weighment and necessary documentation.
Estm. Qty. Rate per
(M/T) M/T(Rs.)
45,000 MT 251/-
(Two hundred
fifty one only)
2.
Stock Verification:
The estimated quantities indicated above are only for the purpose of evaluation of the price bid by the company and the same should NOT BE construed as a guarantee of the actual quantity to be handled. 250 MT 80/-
(Eighty only)
19. As per Consignment Agency Contract, the Appellant were required to discharge all statutory liabilities as per Clause 9.4 of the said Contract which reads as follows:-
9.4 The Consignment Agent shall also carry out and observe the provisions of all other laws and other applicable Acts and Statutes in respect of the said stockyard operations and also indemnify the company of liability that may be imposed upon the company for non-observance by the Consignment Agent of any of the provisions of the various laws/act/statutes or for the Consignment Agents failure in ensuring the compliance as aforesaid, and shall keep the company indemnified and reimburse and discharge all sums that may be claimed by appropriate authorities in any manner whether as penalty, fine levy demands or compensation fee, arising out of or consequent upon the breach of the requirements and provisions of any statue(s), law, rules and regulations by the Consignment Agent/or his representative.
20. On a plain reading of the said Agreement dt. 30.03.2001, it reveals that the Appellant were required to carry out the following activities :-
(i) Receiving goods from the factory/premises of SAIL at Fatuha Rail Yard;
(ii) Transportation of goods from Fatuha Rail Yard to consignment agency yard at Banka Ghat;
(iii) Storing (warehousing) the goods with proper stacking and marking for identification;
(iv) Receiving dispatch order from SAIL on the basis of which they prepare issue documents;
(v) Arranging dispatch as per direction of SAIL after proper weighment, issue of documents, etc.;
(vi) Maintain records of receipt and dispatch of goods and stocks available in consignment agency yard.
21. The Service Tax Levy on the Clearing and Forwarding Agent had been introduced with effect from 16.07.1997. In clarifying the scope of the said service, a Circular dt.11.07.1997 was issued by the CBEC and Trade Notices were also issued by various filed formations, broadly, laying down the list of activities /services normally carried out by agents for the principal to be called as Clearing and Forwarding Agent. The extract of Boards Circular dt.11.7.1997 is as below:
2.2?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 C&F 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 despatch orders from the principal;
(d) Arranging despatch of goods as per the directions of the principal by engaging transport on his own or through the authorised transporters of the principal;
(e) Maintaining records of the receipt and despatch of goods and the stock available at the warehouse;
(f) Preparing invoices on behalf of the principal.
22. The aforesaid list of activities though not exhaustive, but has been scrutinized and considered by various judicial fora time and again and are accepted to fall under the scope of Clearing and Forwarding Agent Service.
23. The argument advanced on behalf of the Appellant that they had been merely engaged for receiving the iron and steel products meant for export from the railway yards; for storing the same in the Consignment Stockyard, and stacking it properly; loading and delivering the same in the respective trucks of buyers in Nepal, and raise invoices on behalf of M/s. SAIL to the consignees at Nepal, hence, these services fall under the scope of Cargo handling services. Further, since the cargo was meant for export to Nepal, accordingly, no Service tax was applicable on such services. The said claim needs scrutiny in the backdrop of the definition of Clearing and Forwarding Agent, the Circular issued by Board which received judicial recognition and the terms and conditions between the Appellant and M/s SAIL stipulated in the Agreement dt.30.03.2001.
24. We find that under the agreement dt.30.03.2001, M/s. SAIL had appointed the Appellant as their Consignment Agent and authorized them to receive the stocks from railway yard on their behalf, stack it in the stock yard, maintain the stock in the stock yard properly and load in the trucks of consignees of Nepal after preparation of necessary documents for and on behalf of M/s. SAIL. The activities were not limited to just loading and unloading of the cargo but also involves stacking which included marking/painting, loading into customers vehicle for delivery with weighment and necessary documentation. Also, the Appellant were required to carryout the stock verification during storage of the said goods at the said stockyard. A comparison between activities carried out by the Appellant and the ones listed in the aforesaid Circular, it is clear that the Appellants services rendered to M/s SAIL fall under the scope of clearing and forwarding service. Besides, under the said agreement the Appellant represent M/s SAIL before all concerned relating to the movement of said goods, as their agent. In other words, the relationship between M/s SAIL and the Appellant is admittedly that of a principal and agent, which is also amply clear from various terms and conditions of the agreement. The service of consignment agent has been specifically included in the scope of Clearing and Forwarding Agent service. Admittedly, the Appellant carry out all these activities as an agent of M/s SAIL for movement of the goods and hence the Appellant render the service of a clearing and forwarding agent.
25. It is the contention of the Ld. Advocate that even though they had been described as Consignment Agent of M/s SAIL in the Agreement , but in fact they had not carried out the activity of a consignment agent, but rendered services of cargo handling. On a comparison between the scope of Cargo Handling Service and that of services as a Clearing and Forwarding Agent, it can easily be inferred that in the case of Cargo Handling Services, the service provider renders the services mainly, loading and unloading, packing & unpacking, transferring the cargo from one place to another and incidental services to the same. They are not required to maintain the stocks and keep records of the goods and prepare the necessary invoices/ dispatch documents and sign the invoices on behalf of the principal. This is the service normally rendered by a clearing and forwarding agent. Therefore, the claim of the Appellant that they were rendering Cargo Handling Services, is unacceptable. Besides, the Agreement dated 30.03.2001 clearly mentioned the Appellants status as a Consignment Agent and the Appellant in fact, rendered all services as a Consignment Agent to its Principal, M/s. SAIL and the remuneration received was a consolidated one, which comprised all the services including preparation and discharging documents of the stock received by the Appellant. Therefore, the activities/services rendered by the Appellant was in conformity with the name given to them in the Agreement as a Consignment Agent.
26. At this juncture it is relevant to refer the principles of classification prescribed at Section 65A of the Finance Act,1994 for determination of appropriate of classification of service between two or more competing entries.
SECTION 65A.?Classification of taxable services. (1) For the purposes of this Chapter, classification of taxable services shall be determined according to the terms of the sub-clauses of clause (105) of section 65.
(2)?When for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows :-
(a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description;
(b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable;
(c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration.]
27. A simple reading of the said principles of classification, it is clear that as per sub-sec.2(a) the sub-clause which provides most specific description to be preferred to sub-clause providing a general description and under Sub-sec.2(b), a composite services consisting of combination of different services shall be classified as if they consisted of a service which gives them essential characteristics. Reading the agreement between M/s. SAIL and the Appellant, it is clear that the Appellant have been appointed as a consignment agent, which is specifically included in the definition of C&F Services. In contrast, the claim of the Appellant that they are rendering cargo handling service to M/s. SAIL and accordingly classifiable under the Heading, Cargo Handling Service; in our opinion, is a service, which is more general in nature than the specific service of a consignment agent included in the definition of C&F Agent. Besides, the service of a consignment agent provides the essential characteristics to the bundle of services rendered under the said agreement. Therefore, when cargo handling services vis-`-vis the service of a C & F Agent are considered in the light of the Agreement dated 30.03.2001, it can inevitably be concluded that the C & F Agent service provides the essential characteristics to the entire gamut of the services provided by the Appellant to M/s. SAIL.
28. We find that the facts of the present case are more or less similar to the one considered by the Honble Karnataka High Court in the case of CCE, Bangalore vs. Mahaveer Generics reported in 2010(17) STR 225(Kar). In that case, by an agreement, the respondent was appointed as consignment agent by the principal for marketing of the product and in the agreement itself, the respondent was described as a consignment agent. The activities which the consignment agents were required to discharge had been narrated in the said agreement namely, the principal to supply the product from any of its depots in loan licence to the agent on a consignment basis through a stock-transfer note for sale by him, as the agent of the principal. It was the argument of the Respondent that since they were rendering the service of a commission agent, therefore they would not be liable to pay Service Tax under the category of Clearing and Forwarding Agent.
29. However, rejecting the said argument , Their Lordships after a detail and elaborate discussion on the scope and meaning of the expression, Clearing and Forwarding Agent as defined under the Finance Act,1994 and taking note of judicial opinion on the subject had observed as follows:-
Thus, the activity carried on by the assessee with reference to the text of the enactment would depend on the nature and activity and as held by Their Lordships both in text and context the word includes as mentioned in the definition clause of clearing and forwarding agent we find that the Legislature in its wisdom have desired to give extended and enlarged meaning to such expression and as such we accept the contention of the revenue to hold that the activity carried on by the assessee in question would fall within the purview of clearing and forwarding agent and accordingly we answer the question of law framed herein above by holding that the services rendered by the respondent would fall within the category of clearing and forwarding agent and thus, amenable to the definition of taxable service...
30. We find that the judgements relied upon by the learned Advocate are based on the ratio of this Tribunal in the case of Mahabir Generics case (2004-170-ELT 28(Tri.-Del.). The said judgement now being overruled by the Honble Karnataka High Court, hence, all these decisions cited by the learned Advocate are no more good law and accordingly, cannot be followed.
31. On the aspect of limitation, we find that with regard to Appeal No. ST-188/08, the notice was issued invoking extended period of limitation, consequent to a raid of their premises by the DGCEI, and recovery of documents indicating suppression of taxable value and non-payment of service tax. We agree with the finding of the Ld. Commissioner(Appeals) that the longer period of limitation is invokable as the Appellant had not discharged their service tax liability inspite of being made liable to discharge all statutory liability of a consignment agent as stipulated at clause 9.4 of the Consignment Agency agreement with M/s SAIL; besides they suppressed the taxable value & intentionally evaded payment of service tax stating the service rendered by them as cargo handling service. With regard to the subsequent two show cause notices dt. 05.02.2008 & 26.02.2008, subject matter of Appeal No.ST-178/08, the Ld. Advocate has argued that since the facts were within the knowledge of the department, subsequent notices were barred by limitation. In this connection, he has referred to the ratio of the Honble Supreme Court in Nizam Sugars case(Supra) and Larsen & Toubros case(Supra). On this aspect, the Ld. AR(Addl.Commissioner) brought to our notice that there has been change in circumstances which is clear from the finding of the Ld. adjudicating authority who had observed that the Appellant had neither filed any returns nor responded to any of the queries of Range Officer nor submitted the records/data demanded by the department relating to the taxable value received from M/s SAIL and they produced the records/data on 08.08.2007 only after summons were issued to them. The Ld. Adjudicating authority also observed that all along the Appellant were claiming and mis-declaring their services as export of cargo handling services and mis-declared to the department that the charges were received in convertible foreign currency which was later revealed to be received in Indian Rupees. We find merit in the said reasoning advanced by the learned Commissioner which indicates that there is an element of mis-declaration by the Appellant all along claiming that their services a export services and the amounts of sale proceeds were received in convertible foreign currency and not in the Indian Rupees and also suppression of the taxable value received from M/s SAIL inspite of repeated reminders from the Range Officer. Therefore, the demands issued to them are not barred by limitation and extended period of limitation is rightly invoked in their case. Consequently, imposition of penalties on the Appellant Company under various provisions of Finance Act, 1994 by authorities below, on the basis of above facts, are justified. In view of the above findings, the Appeals ST-188/08 & ST-178/08, are dismissed and the Orders of lower authorities are upheld to this extent.
32. Regarding the penalty imposed on the Director, Shri Atul Kumar Jain, we find that both the authorities below have not recorded specific involvement of Shri Atul Jain in the short/non payment of the service tax warranting a personal penalty against him except holding that he was overall incharge of the affairs of the Appellant Company. In these circumstances, personal penalty imposed on Shri Atul Kr. Jain under Section 81 of the Finance Act, 1994 is not maintainable. Consequently, the Order imposing penalty on Shri Atul Kumar Jain by the lower authorities, is set aside and the Appeal bearing No.ST-189/88 filed by Shri Atul Kumar Jain is allowed. .
Pronounced on 26.09.2012
Sd/- Sd/-
(S.K.GAULE) (D.M.MISRA) TECHNICAL MEMBER JUDICIAL MEMBER
DUTTA/
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ST/A/178, 188-189/08
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