TMI Blog2006 (6) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal by an agent on payment of commission basis would amount to providing services as 'clearing and forwarding agent' within the meaning of the definition of the expression 'clearing and forwarding agent' under section 65(25) of the Finance Act, 1994, as held in the decision of the Tribunal in Prabhat Zarda Factory (Pvt.) Ltd. vs. CCE, Patna, reported in 2002 (145) ELT 222 (Tri.)=2002 (50) RLT 326 (CEGAT-Kol.). Since in the other three appeals similar question regarding applicability of the ratio of Prabhat Zarda Factory (Pvt.) Ltd. had also arisen, the above question was also referred to the Larger Bench in all those appeals. 3. We make it clear, before embarking upon the discussion on the controversy referred to the Larger Bench, that what we say should not be construed so as to be deciding any of the other issues involved in any of these appeals or deciding whether, on the facts of those appeals, the assessees were or were not providing services as clearing and forwarding agent . 4. The Controversy has arisen over the proposition laid down in Prabhat Zarda Factory (Pvt.) Ltd., supra, to the effect that procuring orders by an agent from the dealers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forwarding operations was not a clearing and forwarding agent, but was only a commission agent. It was submitted that a person who only procured orders for the principal, was not directly or indirectly concerned with removal of goods. It was submitted that procuring of order was not an operation undertaken for clearance or forwarding of goods. It was also contended that for classifying taxable service essential characteristics of service were required to be examined and on that basis, mere procurement of orders for the principal was not essential characteristic that would make it fall within the meaning of clearing and forwarding agent . 6. The learned counsel for these appellants placed reliance on the following decisions in support of their contentions:- (a) The decision of the Supreme Court in Commissioner of Central Excise, Pondichery vs. ACER India Ltd. reported in 2005 (61) RLT 719 (SC)=2004 (172) ELT 289 (SC), was cited for the proposition that it was impermissible to levy a tax indirectly. (b) The decision of the Supreme Court in Navin Chemicals Mfg. and Trading Co. Ltd. Vs. Collector of Customs reported in 1993 (68) ELT 3 (SC), was referred to for pointing out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h commission agent within meaning of clearing and forwarding operations. It was submitted that the expressions in relation to and in any mariner have wide significance and, therefore, Prabhat Zarda Factory (Pvt.) Ltd. has been correctly decided and procurer of order will be considered as clearing and forwarding agent. The learned authorized representative placed reliance on the decision of the Supreme Court in M/s Doypack Systems Pvt. Ltd. vs. Union of India and others reported in 1988 (2) SCC 299 at 302, cited in Tamil Nadu Kalyana vs. Union of India and others reported in 2004-TIOL-36-SC-ST to point that in paragraph 47 of the judgment it was, inter alia, observed that the words in relation to have a wide meaning and are used in the expansive sense. 8. The proposition that the activity of procuring orders on commission basis is a service definitely concerned with clearing and forwarding operations occurs in paragraph 9 of the order passed in Prabhat Zarda Factory (Pvt.) Ltd. which is reproduced hereunder: 9. We have considered the submissions made from both the sides. The main contention of the appellants is that M/s RZC cannot be held to be a clearing and forwardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elatable to the clearing and forwarding operations and can in any manner and it is not necessary that the said agent must deal with the goods directly. As such, we are of the view that the lower authority has rightly concluded that M/s RZC is a clearing and forwarding agent of M/s Prabhat Zarda Factory and services provided by them are liable to tax. [Emphasis added] 9. The definition of clearing and forwarding agent under section 68(25) of Chapter V of the Finance Act, 1994 reads as under: Clearing and Forwarding Agent' means 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. . 9.1 From the above definition of clearing and forwarding agent , it is borne out that the service should be connected with clearing and forwarding operations. The 'clearing and forwarding' operations would be various activities having bearing on clearance of goods which would involve documentary process and arrangements for transfer of goods to their destination, which process may also involve clearance at subsequent stages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods or services or documents of title to such goods or services; or collects payment of sale price of such goods or services; or guarantees for collection or payment: for such goods or services; or undertakes any activities relating to such sale or purchase of such goods or services. This clearly shows that the activity of mere procurement of purchase orders for the principal on commission basis of a commission agent is treated separately by the Parliament from the activities of a clearing and forwarding agent. Activity of procuring orders is thus independent of clearing and forwarding operations. The agents doing these activities can be different. Moreover, clearing and forwarding operations do not flow directly or indirectly from mere procurement of orders. There is no obligation on the person procuring orders as a commissi9n agent for the principal, only by virtue of that agency, to carry out clearing and forwarding operations in respect of the goods which are to be supplied pursuant to the orders so procured. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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