TMI Blog2012 (5) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturers for such sales - the relationship between the manufacturers and the appellants as per the contract would give the activities and nature of franchisee services as defined by the above provisions and there is a relationship as franchisor and franchisee between the two - One difference that we see is that the excise duty is being paid on the value at which goods are sold by the appellants to the customers. In fact this factor is in favour of the case made out by the Appellants - pre deposit waived. - Service Tax Appeal No.1565 of 2010 - ST/S/78/12-CUS - Dated:- 16-1-2012 - Archana Wadhwa , Mathew John, JJ. For Appellants: Shri L P Asthana , Adv., Shri Ramesh Nair, Adv . For Respondent: Shri Amrish Jain, DR Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Revenue was of the view that the appellants should have paid service tax on the opportunity cost charged by the Appellants in the first type of sales and on the price differential charged in the second type of sale of goods under the head for "Franchisee Service" under clause 65 (105) ( zze ) of Finance Act, 1994. In the case of the first type of transaction the question is only about classification with no consequence on the tax to be paid because service tax on such amounts is already paid by the appellants. Revenue issued a Show Cause Notice dated 22-02-2010 demanding service tax amounting to Rs.4,65,42,505/- for the period Oct 2004 to March 2009. The SCN has been adjudicated by the impugned order confirming service tax demand of Rs.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards the business given by them to certain parties like Premier Refractories , Katni Tile Works, Mahakoshal Potteries. In those cases, the customers of said parties placed their purchase order directly to them and they supplied the material and invoiced/billed directly to their customers and collected the sales value from them directly. The Appellant did not come into picture for any of these transactions and received the middlemen commission only for giving the business to them. From the records/books of accounts of the Appellant also make it clear that there is no customer order/purchase order, billing, collections involved by the Appellant in such transactions". 6. This matter needs no detailed discussion at this stage of consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. They submit that the manufacturers are not acting as representatives of the appellant in such transactions. They submit that the appellants have not given representational rights to the manufacturers for such sales. The manufacturers have not been given blanket permission to manufacture the goods. The manufacturers can manufacture the goods only as per the direction, specification and quality and quantify as ordered by the appellants. The goods are dispatched to the person to whom the appellants direct. The franchises are not paying any pre-determined amount to the appellants and no such amount is stated in the agreement. To clarify the matters they make the following submissions: (i) the fire bricks are dispatched to the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying excise duty and hence there will not be any additional realization of revenue. 14. They further argue that the demand is time barred because the manufacturers were paying excise duty on the value at which the goods were being sold by the appellants. Further there was interaction between the appellants and Revenue during the period 2005 to 2010 when the facts were disclosed to Revenue and no charge of suppression is maintainable against them. 15. The Ld. AR for Revenue relies on the legal provisions in Finance Act 1994 in the matter of Franchisee Services as under: Section 65(47) of Finance Act, 1994 prior to 16.6.2005 "'Franchisor means any person who enters into franchise with a franchisee and includes any associate of franc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself constitute "Franchise" and the condition listed is sub-clause (ii) to (iv) of the earlier definition are no more required to be satisfied. 16. He argues that the relationship between the manufacturers and the appellants as per the contract would give the activities and nature of franchisee services as defined by the above provisions and there is a relationship as franchisor and franchisee between the two. The appellants are receiving the consideration for the services rendered by them in the guise of price difference between the price at which goods are bought from the manufacturer and the price at which goods are sold by the appellants. He points out that the entire transaction is a jugglery on paper because the goods are actuall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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