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M/s. Container Tea and Commodities Versus CCE, Salem

2016 (2) TMI 27 - CESTAT CHENNAI

Business Auxiliary Service but not commission agent service - claim of exemption in relation to agriculture produce - acting as an agent for a number of South Indian Tea Estates in the marketing and sale of their tea overseas and are professional tea taster. - it is submitted that, appellant was undertaking the service on behalf of the tea exporters in various ways in respect of export of tea which is an agricultural produce and therefore, the demand of tax is unsustainable. - Exemption Notifica .....

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ose of export and also deals with details such as colour, taste, quality and quantity for export of tea and are professional tea taster. They also monitor the shipment of the goods and verify shipment documents, port regulations and other formalities for export of tea. Therefore, we find that the above activities do not fall within the meaning of commission agent. Accordingly, we hold that the appellant's activities are rightly covered under the category of "BAS" other than commission agent. .....

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d Accountant For The Department : Shri B. Balamurugan, AC (AR) P.K. Choudhary, Judicial Member - All the three appeals, two by the assessee M/s. Container Tea and Commodities and one by Revenue, are taken up together as the issue involved is common. The details of the appeals are as under:- Appeal No. O/O No. & Date O/A No. & Date Duty (Rs.) Period ST/40294/2013 7/2012 dt. 30.10.2012 - 1,35,53,523/- 37,16,942/- + Penalty Oct. 04 to Sep. 09 and Oct. 09 to March 2011 ST/40440/2013 (Deptt. .....

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ssional tea taster. Vide orders of the adjudicating authority tax was demanded on the assessee under the category of "Business Auxiliary Service". 3. The learned Counsel for the appellant-assessee, Shri P.C. Anand, submits that the appellant was undertaking the service on behalf of the tea exporters in various ways in respect of export of tea which is an agricultural produce and therefore, the demand of tax is unsustainable. He also submits that they have already paid an amount of S .....

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011 (23) STR 77 (Tri.-Bang.) 7. MNC Corporation Vs. CCE, Mangalore 2009 (16) STR 624 (Tri.-Bang.) 8. Circular No. 143/12/2011-ST dt. 26.05.2011 4. He further submits that the appellant-assessee believed and continues to believe that they are commission agents in respect of agricultural produce and that tea is not a manufactured commodity but agricultural produce and no liability arises to pay service tax on any commission received. Further he submits that the service of a commission agent were w .....

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so the grounds of appeal in respect of the Revenue appeal and submits that 'agricultural produce' means any produce resulting from cultivation or plantation on which either no further processing is done or such process is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but makes it only marketable. He further submits that the appellant-assessee is trying to take shelter under Notification No. 13/2003-ST dated 20 .....

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ng the business of cultivators/growers who are ultimate manufacturers. In fact, the activity of the appellant-assessee is nothing to do with agricultural produce and they are dealing with the manufactured commodity which is black tea. He further submits that the service provider is not covered under commission agent category. As the functions of the commission agent as defined under Section 65(19) strictly means that he has entered into an agreement with the principals for sale and purchase of g .....

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ices of the appellant-assessee include fixing the value of tea, completion of negotiation of the prices between the buyer and the exporter and finalization of the contract between them. We also find that the appellant assists in the system of grading and standardization of the tea for the purpose of export and also deals with details such as colour, taste, quality and quantity for export of tea. They also render their services in fixing the price for tea and after completion of negotiation they .....

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see for having carried out sales effectively as given below:- (i) 2.5% to 3% of export value depending upon the age of business connection (ii) ₹ 0.50 per kg. towards defragment of partial cost pertaining to fax, phone, e-mail, courier, sampling charges and other specified items. There is no such MOU/agreement available on the records. 7. The above activities show that in the whole process of export of tea, they guide exporters suitably in achieving the objectives to fulfil the contractual .....

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t; or (ii) promotion or marketing of service provided by the client; or Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of chance, organized, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lott .....

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service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to "manufacture" of e .....

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goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services (b) "Excisable Goods" has the meaning assigned to it in clause (c) of Section 2 of the Central Excise Act, 1944. (c) "Manufacture" has the meaning assigned to it in clause (f) of Section 2 of the Central Excise Act, 1944". As seen from the above definition of "Business Auxiliary Se .....

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ce Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby directs that the following notifications of the Government of India in the Ministry of Finance (Department of Revenue), as specified in column (2) of the Table below, shall be amended or further amended, as the case may be, in the manner and to the extent specified in the corresponding entry in column (3) of the said Table, namely: TABLE S. No. Notification No. and date .....

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Explanation, the following shall be substituted, namely:- "Explanation. For the purpose of this notification,-(i) "commission agent" means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase. (ii) "agricultural produce" means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like .....

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ndantly clear that the commission agent is a person who causes sale or purchase of goods on behalf of the principal company for a consideration which is normally governed by an agreement between the principal and the agent. Whereas, in this present case, we find that, as already explained in the above paragraphs, appellant's activities are not only restricted to sale, but includes host of other activities including assisting in the system of grading and standardization of tea for the purpose .....

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