Customs, Excise and Gold Tribunal - Delhi
Kulcip Medicines (P) Ltd. vs Cce on 29 June, 2005
ORDER
C.N.B. Nair, Member
1. The appellant distributes the medicines manufactured by M/s. Cipla Ltd. Under the impugned order it has been held that the appellant is a clearing and forwarding agent of Cipla and service tax was payable on the appellant's receipts under Heading 'Clearing and Forwarding Agent'. That finding is being challenged in the present appeal.
2. The submission of the appellant is that in terms of the contract with Cipla, delivery of the medicines was effected by Cipla to the appellant at Ambala and the appellant carried out only further distribution. The learned Counsel for the appellant took us through the terms of the agreement and highlighted that there was no clearance of the goods from Cipla's factory by the appellant. If at all, his job was that of a forwarding agent. It is the appellant's submission that service becomes service of clearing and forwarding, only if, both clearing and forwarding are undertaken. It is being stressed that service tax is not attracted on clearing of forwarding charges when undertaken in isolation; but only when both these services are rendered together. the learned Counsel also took us to CBEC Circular No.37B Order No.2/1/2002.ST dated 20.04.2002 and submitted that according to the Circular only if C & F Agent carries out all activities in respect of goods right from stage of their clearance from the premises of the principal to its storage and delivery to the customers, tax would be attracted.
3. Learned Counsel has also submitted that this issue had come up before this Tribunal in the case of another C&F agent of Cipla, M/s. Mahaveer Generics, Bangalore wherein also, the terms of the relationship was similar and the Tribunal held vide its order ST F No.12/04-NB(A) dated 27.4.2004 that no Service Tax was attracted. The learned Counsel strongly relied upon on this decision in support of his case.
4. The learned Departmental Representative's contention is that there is no dispute that the appellant is a C&F Agent of Cipla. It is his contention that once the person is admittedly a C&F Agent, it is not open to him to argue that the services rendered by him is not the services of C&F agent. Learned Departmental Representative, therefore, submitted that matter is to be treated as settled.
5. The taxable service in the present case is "any service provided to a client, by a clearing and forwarding agent, in relation to clearing and forwarding operation in any manner" (Sub-clause (j) Section 65(105) of Finance Act, 1994). A perusal of this definition makes it clear that, in order to attract the levy, the services must be "in relation to clearing and forwarding operation". Thus, the definition makes it clear that all services rendered by the clearing and forwarding agent are not within the scope of the levy; the levy is limited to "clearing and forwarding operations". The circular of the Board on this issue may be read:
"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, dispatches these goods as per order 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 receive 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 carried out all activities in respect of the goods right from stage of their clearances from the premises of the principal to its storage and delivery to the customers."
6. The above Para in the circular makes it clear that only when a C&F agent carries out both clearing and forwarding, the levy will be attracted. It is clear from the terms of the agreement that appellant herein does not attend to the clearing of the medicines manufactured by Cipla. Consignments of medicines are cleared from the factory by the manufacturer and delivered to the appellant at his premises. In this factual situation, it has to be held that there is no clearing by the appellant and for that reason; the service rendered by the appellant does not satisfy the requirement of clearing and forwarding. We, therefore, are of the view that demand is not sustainable. To the same effect is our earlier decision in the case of M/s. Mahaveer Generics. Accordingly, following our earlier decision, the present appeal is allowed after setting aside the impugned order. The appellant shall be entitled to relief, if any.