Custom, Excise & Service Tax Tribunal
Gudwin Logistics vs Vadodara-I on 9 November, 2023
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Service Tax Appeal No. 13934 of 2014 - DB
(Arising out of OIA-VAD-EXCUS-001-APP-322-14-15dated 12/08/2014passed by
Commissioner of Central Excise, Customs and Service Tax-VADODARA-I)
Gudwin Logistics ........Appellant
302-303, Earth Complex, 44-45, Punitnagar,
Old Padra Road,
Vadodara, Gujarat
VERSUS
C.C.E. & S.T.-Vadodara-I ......Respondent
1st Floor...Central Excise Building, Race Course Circle, Vadodara,Gujarat- 390007 WITH Service Tax Appeal No. 13936 of 2014 - DB (Arising out of OIA-VAD-EXCUS-001-APP-514-14-15dated 05/11/2014passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-I) Gudwin Logistics ........Appellant 201, Shiv Shakti Complex, 84, Sampatrao Colony, Alkapuri, Vadodara, Gujarat VERSUS C.C.E. & S.T.-Vadodara-I ......Respondent 1st Floor...Central Excise Building, Race Course Circle, Vadodara,Gujarat- 390007 APPEARANCE:
Shri Dhaval K Shah, Advocate for the Appellant Shri P K Singh Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C.L.MAHAR Final Order No. A/_12580 -12581_/2023 DATE OF HEARING: 14.07.2023/20.07.2023 DATE OF DECISION: 09.11.2023 C L Mahar The brief facts of the matter are that the Appellants are undertaking work of facilitating of shipping of goods through various Shipping Lines or Airlines. In case wherein the appellants asked by their clients to undertake work pertaining to Custom Clearance of their export or imports Cargo, on that case they employ the services of some qualified Customs House Agent 2 ST/13934, 13936/2014-DB by outsourcing the service of qualified CHA as they themselves don't have a valid CHA license and accordingly, they make payment to the qualified CHA and in turn, the appellants charges their clients for the clearing working on which service tax is paid by the appellant.
1.1 It is further been submitted by Learned Advocate that the Appellant do not undertake Custom House Agent Work on their own as they are not qualified for such work. However, the charges received by them from their clients are taken by them as CHA charges and appropriate amount of the service taxis paid by them of such charges and deposited with the department.
1.3 The Department entertained a view that since the Appellants are not registered a Customs House Agent with the Custom House and therefore they do not fall under the service category of Custom House Agent.
However, the activity undertaken by them qualify to be classifiable under Clearing and Forwarding Agents Services. The department issued two show cause notices. The Show cause notice no, ST(Adj.)13/Gudwin/JC/07 dated 4thMay, 2007 was issued demanding Services Tax of Rs. 6,85,562/- as per the provision of Section 73 of Finance Act 1994 stating that the activity undertaken by them is rightly classifiable under services category of 'Clearing Forwarding Agents' Service. Another show cause notice dated 05.03.2008 was issued, wherein only following charges have been made:
(i) their service tax registration under the category of "Customs House Agent" should not be suspended/cancelled and they should not be required to apply & obtain service Tax registration in the category of "Clearing & Forwarding Agent" as defined in Section 65(25) of the Finance Act, 1994 and the taxable service as mentioned in the foregoing Paras be classified under Section 65(105) (i) of the Finance Act. 1994;
(ii) penalty should not be imposed under Section 77 of the Finance Act.1994 (as amended) for not obtaining Registration Certificate & not filling ST-3 Returns in the category of Clearing & Forwarding Agents 1.4 The above show cause notices were adjudicated wide impugned Orders-In-Original No. 8/Dem/JC/D-III/07-08 dated 17.10.2007 And Order-
In-Original No. DN/ST/57/DEM/08-09dated 04.02.2009. In the impugned Order in original it has been held that service provided by the Appellant is falls under 'Clearing and Forwarding Agents' as defined under section 65 (25) Finance Act, 1994 and accordingly the service tax demand as 3 ST/13934, 13936/2014-DB demanded in the show cause notice has been confirmed and penalties under Section 76 and 78 of the Finance Act, 1994 has also been imposed. The appellant have filed appeal before the Commissioner (Appeal), who in his order No. VAD-EXCUS-001-App-322/14-15 dated 12.08.2014 and order-In- Appeal No. VAD/EXCUES001-AVV 514/2014 No. 15 dated 05/11/2014 has held that service provided by the appellant are more specifically classifiable under 'Business Auxiliary Service' as defined under Section 65(19) of Finance Act, 1994.
2. The Learned Advocate appearing for the appellant has submitted that as per the definition of Clearing Forwarding Agent Service they need to have a contract with the principles service recipient and generally such C & F Agents are engaged or appointed by manufacture of goods for distribution of goods. Whereas the appellant have not been appointed by any principle nor they are engaged for distribution of any goods. It has further been stated that for C & F agent's the main work is clearing forwarding where the appellant undertake the following work:
"Negotiating Freight, with a Shipping Line or Air Line on long term basis and thereafter, negotiating with the Customers, the Appellants, quote their Freight Rate, to their Customers, whereas, the Shipping Line or Air Line, quotes its Freight Rate, to the Appellants and the Appellants, make payment of Freight, to the Shipping Line or Air Line, whereas, the Customers of the Appellants, make payment of Shipping Freight or Air Freight, to them and in this case, there is no handling of any goods, whatsoever by the Appellants, themselves."
2.1 On the basis of above the Learned Advocate has contended that appellant is not undertaking any work of Clearing And Forwarding Agents. It has been submitted that in their own case vide final order no A/2173- 2175/2011-WZU Ahmedabad dated 15/12/2011 reported under 2012(26) S.T.R 443 (Tribunal-Ahmedabad) has been held that the activity undertaken by the appellant does, not fall under the category of Clearing And Forwarding Agent Service.
2.3 The Learned Advocate has also submitted that the commissioner (appeals) vide his above mentioned Order-In-Appeal has traveled beyond the scope of the show cause notice and Order-In-Original wherein, he has independently decides to classifiable the activity undertaken by the appellant under 'Business Auxiliary Service 'though the show cause notice has contended to classifiable the activities undertaken by the appellant under the category of 'Clearing And Forwarding Agent Service'. The Learned advocated has referred to Hon'ble Supreme Court decision in case of Caprihans India 4 ST/13934, 13936/2014-DB Ltd. Vs. Commissioner of Central Excise reported under 2017 (51) S.T.R 239 (S C) wherein Hon'ble Supreme Court has held that the decision of the Adjudicating Authority cannot travel beyond charges of show cause notices. The Learned Advocate has also relied upon this tribunal decision in case of Uniform Enterprise V/s CCE & ST- DAMAN reported un 2023(3) TMI 1128- Sales Tax Ahmedabad wherein the matter was remanded back to commissioner (appeals) because he has traveled beyond the scope of show cause notice.
3. We have also heard the departmental representative who has tried to justify the commissioner (appeals) order by cited certain decisions in this regard.
4. We have heard both the sides.
4.1 We find that the appellants have been paying service tax on the charges recovered by them for undertaking work of custom clearances from their clients. The customs clearance work was being done by them through the some other person who are appropriately registered as custom house agent with the customs department. We are of the view that the activity undertaken by the appellant cannot be categorized under Clearing And Forwarding Agent Service since in the appellants own case this tribunals wide order dated 15.12.2011 reported under 2012(26) S.T.R 443 Tribunal- Ahmedabad has held that the activity under taken by the appellant do not fall under the category of Clearing And Forwarding Agent Service. The relevant extract of the decision of this Tribunal in appellants own case is reproduce have below:
"11. The factual matrix is not disputed. The appellant is engaged in various operations. It is also undisputed that one Shri GautamAdvani, Authorised Signatory of the appellant company had stated that they are engaged in facilitating above indicated work. It is also undisputed that the appellant had taken registration certificate as provider of CHA services albeit not having licence as CHA. On this factual matrix, we have to consider the submissions made by both sides regarding classification of the services of the appellant.
12. While holding that the appellant is providing services of clearing & forwarding agent, the adjudicating authority in Para 8.3.3 and 8.3.4 has held as under :
"8.3.3. Considering the above specimen quotations, debit notes and statements which are valid and admitted by the assessees as true and correct (not retracted also) vis-a-vis their claim in the defence reply as mentioned in Para 8.2 and its sub-para above, I find that these specimen quotations, invoices and statements provide the intricate details of the nature of services rendered by them for their client. Whereas the claim made by them in their defence submission is verygeneralised in nature, say for example, in one sentence, they say that the goods are shipped and they pay the freight to shipping line. But, how these goods are shipped is explained in the recorded statements and the 5 ST/13934, 13936/2014-DB documents discussed above, which describes the correct and true nature of the services rendered by them. This leaves no scope of doubt or ambiguity that the assessee do handle the goods the port area as they charge for off loading of cargo from trucks, carting charges, sealing charges, empty containers shifting charges, fumigation charges, charges for phytosanitary certificates, labour charges for stuffing cargo in containers etc to their clients; they are engaged in on-board shifting of the containerised cargo on the vessel for which they pay terminal handling charges (THC) and same is also recovered from their clients on actual basis (they pay Service Tax also on this charge). The above trade practice continues by the assessee even for the period from 2008-2009 though under a different nomenclature in their balance sheet wherein they now they refer the Logistic Income by way of EXPORT-AGENCY CHARGES, EXPORT-LOGISTICS, EXPORT OCEAN/AIR FREIGHT, EXPORT-SLINE BL CHARGES, EXPORT-S/LINE BROKERAGE, EXPORT- SLINE TERMINAL CHARGES. Hence, I find that the assessee do handle the goods and are engaged in the clearing and forwarding operations of the cargo for export/import.
8.3.4 Now, coming to the main plea of the assessee that existence of Principal, contract with Principal, owning a godown, handling dispatch of goods on behalf of Principal, preparing invoices for the goods etc, are the activities clarified by C.B.E.&C. in Circular No. B.43/7/97-TRU, dated 11-7-97 as the services of a Clearing and Forwarding Agent. In this regard, I find that Section 65(25) of Finance Act, 1994 defines "Clearing and Forwarding Agent" as under.
"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;"
13. It can be seen from the above reproduced paragraph that the adjudicating authority has considered the services rendered as clearing & forwarding services based upon the interpretation of the definition given Section 65(25) of Finance Act, 1994 holding that the appellant is providing services directly or indirectly connected with clearing & forwarding operation in the manner.
14. We are of the considered view that the adjudicating authority had incorrectly interpreted the definition which is defining the definition of clearing & forwarding operation.
15. It can be seen from the definition which is reproduced hereinabove in findings of adjudicating authority at Para 8.3.4, the said definition clearly indicated that services rendered by the person will fall under the category of clearing & forwarding operation if both the operations i.e. clearing & forwarding are undertaken by the person.
16. At this juncture, we would like to refer to C.B.E.&C. circular of 1997 which we may reproduce in its entirety.
NOTIFICATION F. No. B.43/7/97-TRU Ministry of Finance Department of Revenue Tax Research Unit New Delhi, dated the 11th July, 1997 To 6 ST/13934, 13936/2014-DB All Commissioners of Central Excise and Customs Sir, Sub : Service Tax on Clearing & Forwarding Agents and rent-a-cab scheme operators.
I am directed to invite your attention to Section 88 of the Finance Act, 1997 which, inter-alia, provides for levy of service tax on the services rendered by clearing and forwarding agents and rent-a-cab scheme operators. It has been decided to bring the above services under the service tax net with effect from 16th July, 1997. Notification Nos. 26/97-S.T. and 27/97-S.T., both dated the 11th July, 1997 have been issued in this regard (copies enclosed).
2. CLEARING AND FORWARDING AGENTS 2.1 "Clearing and forwarding agent" has been defined as "any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consigning agent." The taxable service has been defined as "any service provided to a client, by C&F agent in relation to clearing and forwarding agents are engaged/appointed by manufacturer of goods (both excisable and non-excisable goods).
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 2.3 It has been decided that the person responsible for collecting the service tax in the case of services rendered by a clearing and forwarding agent shall be the person engaging/appointing a clearing and forwarding agent (Notification No. 26/97-service tax refers). It may be noted that unlike in the case of other service tax levies where the service provider is the person responsible for collecting the service tax, in the case of services rendered by the clearing and forwarding agents the service tax liability shall be discharged by the person availing the service so rendered. In other words, the principal who engages a clearing and forwarding agent is the person responsible for collecting and paying the service tax to the exchequer, Commissioners of Central Excise may therefore take necessary action accordingly and also make this position clear by issue of suitable trade notice.
2.4 Further under the Finance Act, 1997 the value of taxable service rendered by a clearing and forwarding agent has been defined as the gross amount charged by such agents from the client for the services of clearing and forwarding operations in any manner. However, under service Tax rules it has been provided that the value of taxable 7 ST/13934, 13936/2014-DB service in relation to services rendered by clearing and forwarding agents to a client shall deemed to be the gross amount of remuneration or commission (by whatever name called) paid to such agent by the client engaging such agent (Notification No. 27/97-S.T. refers).
2.5 For the services rendered, the C&F agent receives commission or remuneration which usually consists of two components :
(I) Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled;
(II) A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is usually given as a percentage of the turnover.
The above two constitute the remuneration or commission paid to the C&F agent by the principal 2.6 In cases where C&F agents engaged for various towns, states or areas are paid only by the regional or the head office of the company appointing such agents, for service tax purposes it would suffice to register only such regional or head office. In such cases the regional office or the head office, as the case may be, should also be required to give an undertaking to discharge the service tax liability.
3. RENT-A-CAB SCHEME OPERATORS 3.1 As per Section 88 of the Finance Act, 1997, 'rent a cab scheme operator' means a person who is the holder of a licence under the Rent-a-Cab Scheme, 1989 framed by the Central Government under the Motor Vehicles Act, 1988. A person is granted a licence by the State Transport Authority under rule 6 of the scheme, a licence is granted to a person who inter alia, maintains not less than 50 motor cabs having tourist permits issued under sub-section (9) of section 88 of the Motor Vehicles. Act. The Rent a cab scheme operators, under the scheme are mandatorily required to maintain branch offices or sub-licensee offices in at least five cities of tourist importance with facilities for housing, maintenance and repair of vehicles.
3.2 Under the Rent-a-cab Scheme, 1989 the operator is required to maintain a register for each vehicle incorporating particulars as regards the hiring of the same in the format prescribed under the Scheme. Further, the operator under Rule 9 of the Scheme is required to collect hire charges from a foreign national or a non-resident Indian, only in foreign exchange.
3.3 The taxable service rendered by a Rent-a-cab scheme operator means any service provided to any person, by a rent a cab scheme operator in relation to the value of taxable service in relation to the service provided by a Rent a cab scheme operator to any person, shall be the gross amount charged by such operator from such person for services in relation to the renting of a cab and includes such rental.
3.4 The value of taxable service in relation to the service provided by a Rent a cab scheme operator to any customer, shall be the gross amount charged by such operator from such customer for services in relation to the renting of a cab and include the rental so charged. Any other charges billed to the customer such as processing charges, administrative fees, charges for providing extra accessories or providing other 8 ST/13934, 13936/2014-DB value added services such as a provision of driver etc. shall also be includible in the gross amount chargeable to service tax.
3.5 However service tax will not be payable in cases where a bill has been raised on a Rent a Cab Scheme operator, by another rent-a-cab scheme operator who has sub-let the motor cab to the latter operator provided who pays service tax on the amount billed to his client for renting out the motor cab so obtained by him.
3.6 The Commissionerates of Central Excise may contact the jurisdictional State Transport. Authority who is the licensing authority under the rent-a-cab scheme, 1989 to identify and register the rent-a-cab scheme operators for the purposes of service tax.
4. GENERAL :
4.1 As per Section 69 of the Finance Act, 1994 read with rules 3 & 4 of the Service Tax Rules, 1994, every person responsible for collection of the service tax is required to be registered with the concerned Central Excise Officer appointed under Rule
3. Notification No. 27/97-Service Tax dated 11-7-97 amends rule 2 of the said rules so as to prescribe that the person responsible for collecting the service tax in relation to the services provided by a clearing and tax in relation to the services provided by a clearing and forwarding agent shall be the person who engages a clearing and forwarding agent and by whom remuneration or and commission (by whatever name called) is paid for such services to the said agent and the person responsible for collecting the service tax in relation to the services provided by rent-a-cab scheme operator shall be the operator who raises the bill for services rendered to any person by such operator.
4.2 Rules relating to levy of service tax on other services are already in existence. The Board desires that the Commissioners should issue suitable notices today itself for information and guidance of the trade. The trade notices may include the procedure to be followed for the registration, maintenance of documents, filing of returns and manner in which the service tax is to be paid. The Trade Notices should provide complete information and guidance to the new assessees and they should or self contained in all respects. The Commissioners are requested also to kindly incorporate the provisions of Chapter V of the Finance Act, 1994, as amended by Finance Act, 1997 and also copies of Service Tax Rules, 1994 (incorporating all the amendments), form of challans, TR-6, etc. in the Trade Notice. Heads of Accounts for payment of service tax on the above services will be intimated in due course. The intention is to provide complete guidance to the new assessees so that all relevant information is made available to them at one place. The field officers are also requested to kindly provide all assistance and guidance to the new assessees in explaining the provisions of service tax and in clarifying their doubts. All possible steps may kindly be taken by the Commissioners to facilitate smooth implementation of the imposition of service tax on the above services.
4.3 the commissioners are requested to give wide publicity to the fact that the service tax on the above two services will come into force from 16th July, 1997. They should also give suitable publicity through newspapers and through the associations of trade immediately to apprise them about the provisions of law and procedures to be followed.
4.4 It has been decided that for all the Commissionerates, the concerned Commissioner having jurisdiction in central excise matters will have corresponding jurisdiction for service tax matters. This applies to Commissionerates in Mumbai and Calcutta as well. (Order No. 4/1/97-Service Tax (3) dated 11th July, 1997 refers).9
ST/13934, 13936/2014-DB Yours faithfully, Sd/-
(T.R. Rustagi) Tel : 3012687
17. It can be seen from the above circular that C.B.E.&C. had perceived the services rendered by clearing & forwarding agent will have to provide services as indicated in above circular. It can be seen that in the instant case, the appellant has not engaged himself in any of the category of work as indicated in above circular, it is very clear from the finding recorded by adjudicating authority and reproduced by us hereinabove.
18. Further, we find that C.B.E.&C., in their circular dated 24-4-02 have reiterated the said clarification issued by them in 1997. The said clarification dated 24-4- 02, more specifically in Para 10 is reproduced below :
"10. The matter has been examined. Normally, a C & F agent receives goods from the factories or premises of the Principal or his agents, stores these goods, despatches these goods as per orders received from the Principal or owner, arranges transport, etc. for the purpose and prepares invoices on behalf of the Principal. For this service, the C & F agents receives commissions on the basis of agreed terms. Therefore, an essential characteristic of any services, to fall in the category of C & F agent, is that the relationship between the service provider and receiver should be in the nature of principal (owner) and agent. The C & F agent carries out all activities in respect of goods right from stage of their clearances from the premises of the principal to its storage and delivery to the customers."
19. It can be seen that C.B.E.&C. had clearly clarified that essential characteristic of any services to get classified under the category of clearing & forwarding agent is relationship between the service provider and receiver and the same should be in the nature of principal (owner) and agent. In the entire case before us, we find that this relationship has not been established by the Revenue which is obvious as the appellant herein is not functioning as clearing & forwarding agent. The clinking point in this case is that the appellant herein is not receiving the goods from principal or storing the goods or dispatching the goods, as per the orders received from the principal or prepares the invoices on behalf of the principal. It is also on record that in these cases, the appellant does not receive any commission as remuneration for receipt/store/despatch and preparing invoices of the goods on behalf of the principal. In the absence of any such service being rendered by the appellant, circular issued by C.B.E.&C. would be binding on the lower authorities.
20. We find that as correctly pointed out by ld. Counel that judgment of Hon'ble High Court of Punjab & Haryana in the case of Kulcip Medicines will specifically cover the issue. With respect, we may reproduce the relevant paragraph from the judgment of Hon'ble High Court.
"11. The question which falls for consideration is whether word 'and' used after the word 'clearing' but before the word 'forwarding' at two places in clause (j) be 10 ST/13934, 13936/2014-DB considered in a conjunctive sense or dis-injunctive sense. It appears to be fairly well settled that the context and intention of legislature are the guiding principles. In that regard reliance may be placed on the judgment of Hon'ble the Supreme Court in the case of Mazagaon Dock Ltd. v. CIT (1958) 34 ITR 368. By necessary intendment the expression 'a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner, contemplates only one person rendering service as 'clearing and forwarding agent' in relation to 'clearing and forwarding operations'. To say that if, one person has rendered service as 'forwarding agent' without rendering any service as 'clearing agent' and he be deemed to have rendered both services would amount to replacing the conjunctive 'and' by a disjunctive which is not possible. The counsel for the revenue has not been able to bring on record any material to show the word 'and' should be construed as disjunctive. He has not shown any 'trade practice' which may lead to a necessary inference that service of one kind rendered by one is invariably considered to comprise both. No argument has been advanced before us by him to canvass that the legislature intention is discernible from the scheme of the statute or from any other relevant material. Therefore the word 'and' should be understood in a conjunctive sense. (See Maharaja Sir Pateshwari Prasad Singh v. State of U.P. (1963) 50 ITR 731. In these circumstances if we read the word 'and' as 'or' then it would amount to doing violence to the simple language used by Legislature which cannot be imputed ignorance of English language. In that regard we place reliance on the judgment of Hon'ble the Supreme Court rendered in the case of Inayat Ali Khan v. State of U.P., (1971) 2 SCC 31 (Para 5) and para 6 of the judgment of Hon'ble the Supreme Court rendered in the case of APE Belliss India Ltd v. Union of India, (2001) 132 E.L.T. 8. The observations of their Lordship reads thus :
"6..........A plain reading of the Section (sic Tariff Public Notice) clearly shows, as contended by Mr. Bhatt, that for an alloy steel to be considered as stainless steel, it will have to satisfy two conditions i.e. The alloy steel should be known in the trade as stainless steel and further, it should contain 11% chromium as a component of the allow steel. This is clear from the use of the word "and". If the intention of the trade notice was to treat the two types of alloy steels as stainless steel, then it would have been made clear by using the word "of instead of the word "and"."
12. We are further of the view that the circulars issued by the Board are binding and meant for adoption for the purposes of bringing uniformity. In that regard reliance may be placed on the judgments of Hon'ble the Supreme Court in the cases of Ranadey Micronutrients v. Collector of Central Excise - 1996 (87) E.L.T. 19 (S.C.) and Paper Products Ltd. v. Commissioner of Central Excise - 1999 (112) E.L.T. 765 (S.C.) = (1999) 7 SCC 84. If the aforesaid principle is applied to the facts of the present case there does not remain any doubt that the circular issued by the Board is to be considered as binding and cannot be deviated even by the department. On that account also the expression 'clearing and forwarding agent' have to be interpreted in the light of the circular. "
21. Yet, in another case of KaramchandThapar& Bros v. U.O.I., Hon'ble High Court of Calcutta, in their judgment dated 22-7-09 had held as under :
"64. The real test of taxable service as clearing and forwarding agent is whether the activity includes inter alia receiving the goods from the factories or the premises of the principal or his agents, warehousing the goods, receiving 11 ST/13934, 13936/2014-DB despatch order from the principal, arranging despatch of goods as per the directions of the principal by engaging transport of his own or through the authorised transporters of the principal, maintaining records of the receipt and despatch of goods and the stock available at the warehouse.
65. In any case, the expression 'clearing and forwarding agent' is apparently conjunctive and not disjunctive. Only clearing activities would not attract service tax in the category of service of clearing and forwarding agent. Similarly only forwarding activity would also not attract tax in the category of service of clearing and forwarding agent. The service provider would necessarily have to be engaged in providing clearing and forwarding services in order to be taxable in the category of clearing and forwarding agent.
66. In Commissioner of Central Excise, Panchkula v. Kulcip Medicines Pvt. Ltd. reported in 2009 (14) S.T.R, 608 (P & H), the Punjab and Haryana High Court held that the expression "a Clearing & Forwarding Agent in relation to clearing and forwarding operations, in any manner", appearing in Section 65(104)(j) read with Section 65(25) of Chapter V of the Finance Act, 1994, contemplates only one person rendering service as 'Clearing & Forwarding Agent".
67. The Court further held and observed that if, a person rendered service as "Forwarding Agent" without rendering any service as "Clearing Agent", he could not be brought within the tax net, since he could not be deemed to have rendered both services."
2. It can be seen from the above reproduced portion of the judgments, that law has been fairly settled which indicate that the clearing & forwarding services can be considered as being rendered, if both the activities are connected and simultaneously done. As has been reproduced by us, the appellant in this case, is not engaged in any kind of activities which are attributable to clearing & forwarding agent service.
23. Coming to the aspect of expressions in the definition of clearing & forwarding agent, more specifically "directly or indirectly", "in any manner", we find that the larger bench of this Tribunal, in case of Larsen & Toubro v. C.C.E. Chennai, 2006 (3) S.T.R. 321 (Tri-LB) (wherein, I was also one of the Member), had specifically held in Para 10, which is reproduced below :
"10. It appears to us that the expressions "directly or indirectly" and "in any manner" occurring in the definition of "clearing and forwarding agent" cannot be isolated from the activity of clearing and forwarding operations. A person may undertake to provide service of procurement of orders as agent of the principal without agreeing to provide services of clearing and forwarding of the goods. Clearing and forwarding has a very specific connotation in the context of movement of goods from the supplier to their destination and agents undertaking clearing and forwarding operations may never have been concerned with procurement of orders for the goods which are cleared and forwarded. A person entrusted with the work of commission agent for procuring orders for the principal cannot insist on also providing services as clearing and forwarding agent in respect of those goods and it would be open for the principal to engage some other person for the purpose of forwarding such goods. In cases where the buyer is under an obligation to take delivery of the goods from the vendor's premises, there would not be even any need on the part of the vendor to engage 12 ST/13934, 13936/2014-DB any forwarding agent, nor can a person engaged for the purpose of clearing and forwarding operations, insist on procuring orders for the principal in the absence of any stipulation to that effect."
24. We find that the ld. Authorised Representative for the Department had been relying heavily on the judgment of Hon'ble High Court of Karnataka in the case of Mahavir Generics. We find that in the case of Mahavir Generics, the agreement between the principal and M/s. Mahavir Generics clearly indicated that M/s. Mahavir Generics will act as consignment agent of the principal and function as indicated in the contract.
25. Their Lordship have reproduced the entire agreement between the principal and M/s. Mahavir Generics wherein responsibility attributed to M/s. Mahavir Generics clearly indicated that they were functioning as 'consignment agent' which is covered under the inclusive definition of clearing & forwarding agent. In view of this reliance placed on said judgment will not carry the case of the Revenue any further.
26. In view of the foregoing, we are of the considered view that the impugned order which held that the appellant has been providing service of clearing & forwarding agent, are incorrect and is liable to be set aside and we do so."
4.2 In view of above we hold that the activity under taken by the appellant do not fall under the category of clearing and forwarding service.
4.3 We also set aside the impugned Commissioner (Appeal)'s order as it has traveled beyond the charges elicited in the show cause notice and in the impugned Order-In-Original While holding the above view, we rely on the Hon'ble Supreme Court decision case of the Caprihans India Ltd. Vs. Commissioner of Central Excise reported in 2017 (51) S.T.R 239(S. C).
5. In view of entire above discussions, we set aside the impugned orders in appeal and appeals are allowed.
(Pronounced in the open court on 09.11.2023) RAMESH NAIR MEMBER (JUDICIAL) C.L MAHAR MEMBER (TECHNICAL) Darshan