TMI Blog2018 (6) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... nable to appreciate the reasoning of the lower authority that the activities of the appellants are in the nature of "consignment agent and would therefore fall within the scope of C&F agents service". The appellant cannot be brought within the fold of clearing and forwarding agents service. They are correctly classifiable only as a commission agent for BAS under Section 65 (19) of the Act. The impugned order holding to the contrary cannot then sustain and requires to be set aside in toto, which we hereby do - appeal allowed - decided in favor of appellant. - ST/MISC/41099/2017 & ST/452/2010 - Final Order No. 40583/2018 - Dated:- 26-2-2018 - Ms. Sulekha Beevi, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri T. Chandran Nair, Advocate- For the Appellant Shri. K. Veerabhadra Reddy, JC (AR)- For the Respondent ORDER The facts of the case are that M/S. Hindustan Unilever Ltd., (hereinafter referred to as HLL or appellants), sold their Dalda brand edible oils and vanaspati business to M/S. Bunge Agribusiness India Pvt. Ltd. (hereinafter referred to as Bunge). An arrangement was made between them and HLL to the effect that the said Oil a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2004, said exemption was restricted to the commission agents dealing in agricultural produce only and, hence, HLL started paying service tax thereon under BAS, w.e.f. 09.07.2004, which was not objected to by the department. iv) That once the department has accepted the very same services as BAS and service tax paid thereon was also accepted, the said service cannot fall under C F agents service based judgments on the issue. v) That CBEC, vide its Circular No. 2/1/2002-ST dated 24.04.2002 has clarified that the essential characteristics of any service to fall in the category of C F agent is that the relationship between the service provider and the receiver should be in the nature of principal and agent. C F agent carried out all the activities in respect of goods right from the stage of their clearances from premises of the principal to its storage and delivery to the customers, which is not so in the present case. vi) That HLL did not receive the goods from Bunge, but the goods were directly despatched to the C F agent of HLL and transportation was done by Bunge at their own cost. Further, HLL did not arrange despatch of goods as per the directions of Bunge. Invoices we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gent to receive the products from Bunge, despatch the same to various depots and arrange for subsequent distribution of the same to various retail stockers. As per para 5.1 of the agreement, Bunge will consign the products to HLL on consignment transfer basis. In terms of paras 2.2 and 4.5 of the agreement, HLL is responsible for the distribution and sale of the products from the depots of their various C F agents by providing distribution network for Bunge. It is specified under para 4.1 of the agreement that HLL shall keep all the goods received by them as the property of Bunge. Further, as per the agreement HLL arranges to book sales order and distribute the products to redistribution stockists and other customers. Thus, the role of HLL is not restricted to commission agent but on the other hand they provide exhaustive range of services which correctly fall within the scope of a clearing and forwarding agent. In respect of GTA services, Ld. AR submitted that sufficient evidence has not been produced by HLL during adjudication other than a reconciliation statement certified by the Chartered Accountant and as such the appellant has not been able to counter the charges against them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission agent. The important takeaways from this agreement are as follows:- i) HLL as commission agent shall provide distribution network to Bunge for distribution of products as per the terms and conditions of the agreement. ii) It is agreed that Bunge will consign the products to HLL on consignment transfer basis to various depots designated by HLL at different locations. iii) Products so received from Bunge shall be duly entered into the stock records of HLL as HLL A/c - Bunge and stored separately. iv) After receipt of the products from Bunge, HLL through its sales force shall arrange to book sales orders and distribute the products to its re-distribution stockists or other customers against proper invoicing and sale documents. v) Para 6.1 specifically lays down that in respect of primary transportation, Bunge will make arrangements, at its own cost for the transportation of the products from its factory to the depots of HLL. 5.4 Thus, as per the agreement, the scope of services to be performed by HLL is only as a commission agent for distribution of products of Bunge in designated territory. Evidently, the responsibility of transporting the products upto t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, in our view is an important difference between the services provided by a commission agent and that by a C F agent for the purposes of Finance Act, 1994. 5.7 Even though the CBEC Circular dated 11.07.1997 relied upon by the adjudicating authority, has not included the activity of clearing of the goods from the factory/premises of the principal , for C F agent, however, we find that in a subsequent Circular No. 2/1/2002 dated 24.04.2002, it was clarified that C F agent carries out all activities in respect of goods right from the stage of their clearance from the premises of the principal to its storage and delivery to the customers . 5.8 The Hon'ble High Court of P H in the case of CCE Vs. Kulcip Medicines Pvt. Ltd. - 2009 (14) STR 608 (P H) overruled the decision of the Larger Bench of the Tribunal in Medpro Pharma Pvt. Ltd. Vs. CCE, Chennai - 2006 (3) STR 355 (Tri.-LB) and interalia held that if the clearing operation is separate from the forwarding operation the levy of tax would not be attracted if it involves only one of the two activities. The relevant portions of the judgment are given below:- 11. The question which falls for consideration is whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainless steel, it will have to satisfy two conditions i.e. The alloy steel should be known in the trade as stainless steel and further, it should contain 11% chromium as a component of the allow steel. This is clear from the use of the word and . If the intention of the trade notice was to treat the two types of alloy steels as stainless steel, then it would have been made clear by using the word of instead of the word and . 12. We are further of the view that the circulars issued by the Board are binding and meant for adoption for the purposes of bringing uniformity. In that regard reliance may be placed on the judgements of Hon'ble the Supreme Court in the cases of Ranadey Micronutrients v. Collector of Central Excise 1996 (87) E.L.T 19 (S.C.) and Paper Products Ltd. v. Commissioner of Central Excise (1999) (112) E.L.T. 765 (S.C.)= (1999) 7 SCC 84. If the aforesaid principle is applied to the facts of the present case there does not remain any doubt that the circular issued by the Board is to be considered as binding and cannot be deviated even by the department. On that account also the expression 'clearing and forwarding agent' have to be interp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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