TMI Blog2015 (5) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... he services rendered by the appellant are looked into, it would clearly fall within the definition of 'clearing and forwarding agent' contained in Section 65(25) of the Act. In order to qualify as a C F Agent, such a person is to be found to be engaged in providing any service connected with 'clearing and forwarding operations'. Of course, once it is found that such a person is providing the services which are connected with the clearing and forwarding operations, then whether such services are provided directly or indirectly would be of no significance and such a person would be covered by the definition. - In the process, it may include warehousing of the goods so cleared, receiving dispatch orders from the principal, arranging dispatch of the goods as per the instructions of the principal by engaging transport on his own or through the transporters of the principal, maintaining records of the receipt and dispatch of the goods and the stock available on the warehouses and preparing invoices on behalf of the principal. The larger Bench rightly enumerated these activities which the C F Agent is supposed to perform. There is no role of the appellant in getting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is providing certain services as Agent. Such services are provided to M/s. Gujarat Ambuja Cements Limited and M/s. Ambuja Cements Eastern Limited (hereinafter collectively referred to as 'Ambuja companies'). At the material time, these were public sector undertakings under the Government of Gujarat. These industries need coal as a raw material for production of cement, which is the main manufacturing activity undertaken by the said companies. Industries that need coal as a raw material generally approach the Ministry of Industries, Government of India with their requirements. The Ministry of Industries, after enquiry, recommends to the Ministry of Coal the quantity that is required to be supplied to such industries. Thereafter, the Ministry of Coal, as per the norms prescribed, allots the coal to these industries through the Long Term Linkage Committee indicating the coal companies and the location from which coal can be made available to them. While fixing the locations from where the coal is to be supplied to such companies, the Committee takes into account the Railways commitment for movement of the coal. The Railways is responsible for placing of rail rakes according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and, therefore, exigible to service tax. Aggrieved by the said order, the appellant preferred an appeal before the Commissioner of Central Excise (Appeals), Kolkata, which was also dismissed by the Commissioner on November 05, 2002. This order was challenged by the appellant before the Customs, Excise Service Tax Appellate Tribunal (for short, 'CESTAT'). 5) The CESTAT has also dismissed the appeal by the impugned order dated May 24, 2004 by observing that the matter is covered by its own judgment in the case of M/s. Prabhat Zarda Factory (India) Ltd. v. Commissioner of Central Excise, Patna 2002 (145) ELT 222. The Tribunal has noted in this behalf that in the said case the Bench of the Tribunal had considered the definition of C F Agent and has held that such definition was very wide and includes any service, even provided indirectly. It was also noted that the said judgment was delivered on February 09, 2002 and thereafter Finance Act of 2003 was introduced and the new service, viz. 'Business Auxiliary Service' appearing in Section 65(19) was introduced. The said service is in relation to promotion or marketing of service provided by the client; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary Service introduced vide Finance Act of 2003. However, we find that the said services are in the nature of promotional or marketing of the customers goods or in the nature of doing the other routine type of jobs like billing or collection of cheques, maintenance of accounts and evaluation of prospective customers and public relation services. The services being provided by the appellant cannot be equated to the above. It is also seen that the expression 'commission agent' has been explained by the Notification dated 20th June, 2003 reported in 155 ELT N-171, vide paragraph 2.1.3 it has been clarified that C F agents work on commission basis do not fall under the definition of 'Business Auxiliary Service', in as much as they are substantially covered within the definition C F service. It has, further, been clarified that under Section 65A of Finance Act, 1994, it has also been provided that in case of overlap, a service would be classified under the head, (a) which provides most specific description, (b) in case of a composite service having combination of different taxable services, the service which give them their essential character and (c) in case the test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiving despatch orders from the principal; (iv) arranging despatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal; (v) maintaining records of the receipt and despatch of goods and the stock available at the warehouse; and (vi) preparing invoices on behalf of the principal. 8) Since the appellant in that case was engaged only for procuring purchase orders for vendor on commission basis and was not engaged in any of the above activities, the larger Bench concluded that the services provided by the said appellant would not fall within the definition of 'clearing and forwarding agent' as contained in the Act. The detailed discussion on this aspect runs as follows: 9.3 An agent engaged only for procuring purchase orders for the vendor on commission basis does not engage in any of the above activities, directly or indirectly. Commission agent engaged to procure orders and not entrusted with the work of clearing and forwarding of the goods would be a person who, in the ordinary course of business, makes contracts for sale or purchase of goods for others. The definition of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 11. We, therefore, hold that mere procuring or booking orders for the principal by an agent on payment of commission basis would not amount to providing services as clearing and forwarding agent , within the meaning of the definition of that expression under Section 65(25) of the Finance Act, 1994, as has been held in the decision of the Tribunal in Prabhat Zarda Factory (Pvt.) Ltd. v. CCE Patna reported in 2002 (145) ELT : 2002 (50) RLT 326 (CEGAT-KOL.). The decision in Prabhat Zarda Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 'forwarding agents' are narrated in the following manner: 442. Characteristics of forwarding agents. A forwarding agent is one who carries on the business of arranging for the carriage of gods for other people. It must be clearly understood that a forwarding agent is not, in general, a carrier: he does not obtain possession of the goods: and he does not undertake the delivery of them at the other end. All that he does is to act as agent for the owner of the goods to make arrangements with the people who do carry, such as shipowners, road hauliers, railway authorities and air carriers, and to make arrangements, so far as they are necessary, for the intermediate steps between the ship and the rail, the customs or anything else. Although there is a clear distinction between a forwarding agent and a carrier, the same person may carry on both activities at once, and contract sometimes as one and sometimes as the other. The fact that a person describes himself as a forwarding agent is not conclusive: and it is a question of fact to be decided according to the circumstances of each case whether a person normally carrying on business as a forwarding agent contracts sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of his principal; but there is a custom of the London freight market that forwarding agents incur personal liability to shipowners for the payment of freight or of dead freight for booked space left unfilled. A forwarding agent who tenders dangerous goods to carriers without warning them of their nature or of the precautions which should be taken in their carriage is personally liable to the carriers for any resulting damage through breach of the implied warranty that the goods are fit for carriage. 11) From the reading of the definition contained in the aforesaid provision, together with its dictionary meanings contained in Legal and Commercial dictionaries, it becomes apparent that in order to qualify as a C F Agent, such a person is to be found to be engaged in providing any service connected with 'clearing and forwarding operations'. Of course, once it is found that such a person is providing the services which are connected with the clearing and forwarding operations, then whether such services are provided directly or indirectly would be of no significance and such a person would be covered by the definition. Therefore, we have to see as to what would con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the coal company as well as the Railways to see that the material required by Ambuja companies is loaded as per the schedule. At no stage custody of the coal is taken by the appellant or transportation of the coal, as forwarders, is arranged by the appellant. We are, thus, of the clear opinion that the services rendered by the appellant would not qualify as C F Agent within the meaning of Section 65(25) of the Act. 13) In view of the aforesaid discussion, the appeals are allowed and the impugned orders passed by the Tribunal are set aside by quashing the demand of service tax made from the appellants. No costs. CIVIL APPEAL NO. 9967 OF 2014 The Commissioner of Service Tax, Kolkata, is aggrieved by the orders dated August 21, 2013 passed by the High Court of Calcutta, which has dismissed the appeal of the Revenue by the impugned judgment, refusing to entertain the said appeal which was preferred by the Revenue against orders dated April 02, 2013 passed by CESTAT. In the said appeal before the CESTAT, it had taken the view, in the case of same appellant, that the appellant was not liable to pay any service tax as it was not covered by the definition of C F Agent as c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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