Custom, Excise & Service Tax Tribunal
M/S J.J. Foam Pvt. Ltd vs Cce, Ghaziabad on 25 June, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing : 25/06/2013 ST/434/2008 [Arising out of Order-in-Appeal No. 100-CE/GZB/2008 dated 29.04.2008 passed by the Commissioner (Appeals), Central Excise, Ghaziabad] For Approval & Signature : Honble Mr. Justice G. Raghuram, President Honble Mr. Sahab Singh, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Whether their Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes M/s J.J. Foam Pvt. Ltd. Appellant Vs. CCE, Ghaziabad Respondent
Appearance:
Shri Jeetu Gupta & Nitesh Garg, CA - for the Appellant
Shri Amresh Jain, DR - for the Respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
Final Order No. 56854/2013
Per Sahab Singh :
This appeal is filed by M/s J.J. Foam Pvt. Ltd. against the Order in Appeal No. 100-CE/GZB/2008 dated 29.04.2008 passed by the Commissioner, Central Excise (Appeals), Ghaziabad.
2. Brief facts of the case are that appellants are manufacturer of P.U. foam blocks and sheets, mattresses, pillows, cushions and bolsters of P.U. foam. During the course of visit to their factory by the Central Excise officers it was observed that appellants had collected certain charges declared as Commissions. The appellants submitted the details of the charges collected by them as Sales Promotion Agents from M/s Aerotech India (P) Ltd. (in short AI) the Department felt that the activities of the appellants fall under Market Research Agency service as defined under Section 65 of the Finance Act. Accordingly a Show Cause Notice dated 06.05.2004 was issued to them demanding service tax amounting to Rs. 1,93,467/- for the period 1999-2000 to 2001-2002 and also for imposing of interest and penalty on the appellant. Show Cause Notice was adjudicated by the Assistant Commissioner of Central Excise Ghaziabad Vide Order No. 36/S.Tax/2006-2007 dated 28.02.2007 in which he confirmed the service tax amounting to Rs. 1,93,461/- along with interest and also imposed the penalty under the Finance Act. The appellants preferred an appeal before the Commissioner Central Excise (Appeals), who vide impugned order has rejected their appeal. Appellants have preferred this appeal against the impugned order in the Tribunal.
3. Ld. Advocate appearing for the appellants submits that the Commissioner (Appeal) has grossly erred in holding that the services rendered by the appellants fall under the Market Research Agency Service. He submits that the appellants have received commission on account of orders procured by them from different parties for sales of the products and the details of such commission were given to the Department. He submits that they were working merely as a commission Agent and their activities fall under Business Auxiliary Service and not under Marketing Research Agency Service. He therefore submits that Order in Appeal is bad in law. He also assails the order on the ground of time bar and submits the Order in Appeal needs to be set aside.
4. Ld. Additional Commissioner AR submits that appellants had entered to an agreement with M/s Aerotech India (P) Ltd. and has submitted that in view of clause b and d of the Para 3.1 of the agreement the appellants activity falls under Market Research Agency Service and accordingly the lower authorities have rightly confirmed the demand.
5. After hearing both sides, we find that the dispute involved in this appeal whether the activities of appellants fall under Market Research Agency Service or not Market Research Agency Service is defined under Section 65(69) of the Finance Act:-
Market research agency means any commercial concern engaged in conducting market research in any manner, in relation t any product, service or utility, including all types of customised and syndicated research services.
Similarly the taxable service in respect of Market Research Agency Service is defined under Section 65(105)(y) as under:-
Taxable service means any service provided or to be provided to a client, by a market research agency in relation to market research of any product, service or utility, in any manner. We find that appellants have entered into an agreement with M/s Aerotech India (P) Ltd. and the appellants in the agreement are appointed as Sales Promotion Agent of M/s Aerotech India (P) Ltd. (AI). In para 3 of the Agreement Obligations of Sales Promotion Agent are mentioned. As per para 6.1 of the Agreement the appellants shall supervise, obtain & promote the sale of products or AI in the territory of Delhi and nearby areas and shall look after the timely delivery & approval of goods, and as per para 6.2 of the agreement the appellants shall be responsible for the payment of invoices of products sold to customers against the order procured by them, and all the expenses incurred by the appellants performing its obligation including promoting the sale and canvassing of orders for the products under this agreement shall be in appellants account and AI will not be liable for the same in any manner whatsoever. As per agreement appellant are entitled to commission for the performance of their obligation at the rate of 6% of the aggregate amount of sale and the rate of commission may be increased or decreased for specific products, after mutual agreement. From para 6 of the agreement we find that activities undertaken by the appellants are more in nature of promotion of sale of the goods of AI and therefore do not fall under the category of Market Research Agency Service as defined under Section 65(69) of the Finance Act. Accordingly we set aside the impugned order and allow the appeal by the appellant.
(Justice G. Raghuram) President (Sahab Singh) Member (Technical) Neha 1