TMI Blog2008 (5) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... nd eighty-one only) under Section 73(2) of the Act, was levied. Against such levy, deposit of Rs. 49,27,918/- (Rupees Forty-nine lakh twenty-seven thousand nine hundred eighteen only) made by the Appellant prior to adjudication was directed to be appropriated. This demand was also followed by equal amount of penalty under Section 78 of the Act. (ii) Interest was levied u/s 75 of the Act, on the service tax demand of Rs. 90,84,881/- and such liability, deposit of an amount of Rs. 26,07,629/- (Rupees twenty-six lakh seven thousand six hundred twenty-nine only), made by the appellant prior to adjudication was ordered to be appropriated. (iii) Penalty @ Rs. 100/- (Rupees one hundred) per day during continuance of failure to comply with the law was imposed under Section 76. (iv) Penalty of Rs. 100/- (Rupees one hundred) per day for failure to comply with the law during 1-9-99 to 16-7-01 and Rs. 1000/- thereafter was imposed u/s 77. 2.1 On the basis of search on 19-4-2002 (as per Authorisation at Page 40 of Paper Book), followed by investigations from time to time, Show Cause Notice (SCN) dated 10-9-2004 (issued on 13-9-2004) was served on the Appellant charging that services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispatch materials by rail/road. The consignments shall be dispatched to the noticee from the factory/other stock yards/consignment agents/processing agents. (2) Take delivery of the materials, arrange transport to the godown, sort and stock them after weighment in accordance with the instructions of TISCO's representative. (3) Load and unload the wagons within the free time allowed by the railways and failing to do so, shall be responsible for demurrage, wharfage and/or other incidental charges. Demurrage, wharfage and / or other incidental charges due to non-placement of wagons in the right position or due to road condition in the rainy season shall also be borne by the noticee. Payment shall be consolidated and shall include the charges incurred by the noticee in connection with the booking of/or taking delivery of materials. (4) Responsible for damage to the rolling stock of the railways or to the property of TISCO lying at the formers premises and such claims shall be adjusted against the bills/dues of the noticee. (5) Unload and transport the incoming materials from the public sidings to the premises of the noticee and shall be responsible for shortages found at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding is null and void. Since, the Show Cause Notice was issued by the Assistant Director General of DGCEI, Kolkata, whereas at the relevant period under Section 73, the Show Cause Notice could have been issued by the Assistant Commissioner or the Deputy Commissioner of Central Excise, whereas Section 73 was amended, w.e.f. 13-5-2005 empowering the Central Excise Officer to issue the Show Cause Notice. The Appellant relied upon the decision in the case of ETA Travel Agency Pvt. Ltd. v. Commissioner of C. Ex., Chennai - 2007 (7) S.T.R. 454 (Tri.-Bangalore). (iii) Show Cause Notice dated 13-9-2004 was not valid for raising the demand for the period from 1-9-1999 to 31-3-2004 as the Show Cause' Notice was issued under Section 73 sub-Section (1) as per para 18 of the Show Cause Notice, whereas under Section 73(1) demand could not be raised for more than one year. That the Appellant relied upon the Supreme Court decision in the case of Collector of C. Ex, Jaipur v. Alcobex Metals - 2003 (153) E.L.T. 241 (S.C.). (iv) Show Cause Notice is non est and hopelessly time-barred as held in the various decisions. In the present case, search and seizure having been conducted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e - 2004-TIOL-344-CESTAT-Del held that consignment agent activity is not covered under clearing and forwarding agent service but falling under business auxiliary services. (vii) In the Show Cause Notice dated 13-9-2004, out of the total demand, the demand of Rs. 36,56,555/- is on the reimbursement of expenditure, which have been added under Rule 6(8) of the Service Tax Rules, 1994 as a value of taxable service for clearing and forwarding agent service. The Appellant relied upon the following cases, wherein in categorical term it was held that service tax is leviable only on remuneration received as clearing and forwarding agent and not on any other reimbursement of expenditure. These cases as relied upon by the Appellant are given below: (a) Sri Sastha Agencies Pvt Ltd. v. Asstt. Commr. of C. Ex. Cus., Palakkad - 2007 (6) S.T.R. 185 (Tri.-Bang.) (b) Bhagyanagar Services v. Commr. of C. Ex., Hyderabad - 2006 (4) S.T.R. 22 (Tri.-Bang.) (c) Comm. of Central Excise Customs ST, BBSR-I v. M/s. Nilalohita Enterprises - 2007 (6) S.T.R. 318 (Tribunal) = 2007-TIOL-680-CESTAT- Kol. (d) Sangamitra Services Agency v. CCE, Chennai - 2007 (8) S.T.R. 233 (Tribunal) = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, the CBEC instruction No. F. No. 137/167/2006-CX.4 dated 3-10-2007 also clarified that Section 73(3) implies the conclusion of the entire proceedings in the Finance Act including Section 76, 77 and 78. (xi) No penalty could be levied since the demand pertain to the period from 1999 onwards when the service tax was a new levy and questions involving interpretation of law was in debate. There was no deliberate defiance of law on the part of the Appellant. The Appellant relied upon the following cases in support of its claim: (a) Hindusthan Steel Ltd. v. State of Orissa - 1978 (2) E.L.T. (J159)(S.C.) (b) Commissioner of Cen. Ex., Pune v. Telco Ltd . - 2006 (196) E.L.T. 308 (Tri.-Mumbai). 5.1 Learned JDR Sri Loni appearing on behalf of Revenue submitted that the learned Adjudicating Authority had very correctly assessed the Appellant and proper SCN was issued well within jurisdiction providing copies of all relied upon documents. Assistant Director, D.G.C.E.I., Kolkata Zonal Unit, Kolkata, was vested with all powers of the Central Excise Officer of the rank of Assistant Commissioner for whole of India in terms of Notification No. 3/04-S.T. dated 11-3-2004. The S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pharma Pvt. Ltd. v. CCE, Chennai - 2006 (3) S.T.R. 355 (Tri.-LB.) (b) Super Poly Fabriks Ltd. v. CCE, Ludhiana - 2006 (4) S.T.R. 595 (Tri-Del.) (c) CCE, Chandigarh v. Adhunik Steel Ltd. - 2006 (4) S.T.R. 542 (Tri.-Del.) (d) CCE, Chandigarh v. ADH Agencies - 2007 (7) S.T.R. 660 (Tri.-Del.) (e) Sony India Ltd. v. CCE, Delhi - 2004 (167) E.L.T. 385 (S.C.) (f) CCE, Delhi -III v. Machino Montell (I) Ltd . - 2006 (4) S.T.R. 177 (P H) = 2006 (202) E.L.T. 398 (P H) (g) CCE, Delhi -IV v. Ilpea Paramount Pvt. Ltd. - 2007 (213) E.L.T. 500 (LB) (h) CCE, Aurangabad v. Padmshri V.V.K. Ltd. - 2007 (215) E.L.T. 23 (Bom.). 6.1 Heard both sides and perused the record and considered the citations made by them. 6.2 Preliminary objection of the Appellant on the issue of jurisdiction relating to issue of SCN did not survive for the reasons argued by the learned JDR repelling contention of the Appellant. The Notification stated aforesaid had empowered the Notice Issuing Authority to exercise powers of Central Excise Officer in respect of the respective jurisdiction. Accordingly Appellant's objection on this score fails. Also nothing could be found to ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any manner. Also by inclusive definition, that Section brought "consignment agent" to its fold to deal them as clearing and forwarding agent. 6.6 The Term "clearing and forwarding operations" was not defined by Finance Act, 1994. Accordingly, such term only calls for interpretation. Instruction No. F. No. B. 43/7/97-TRU dated 11-7-1997 issued by CBEC stated that a clearing and forwarding agent normally undertakes following activities :- (a) Receiving goods from the factories or premises of the principal or his agents; (b) Warehousing these goods; (c) Receiving dispatch order from the principal; (d) Arranging dispatch of goods as per directions of the principal by engaging transport on his own or through various transporter for the principal; (e) Maintaining record of the receipt and dispatch of the goods and the stock available on the warehouse; (f) Preparing invoices on behalf of the principal. Clearing forwarding operations as normally understood by trade and commerce appears to have been understood by Board's Instruction as above. Thus such operation has not only taken into its fold all such activities expected to be carried out by an agent on behalf of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Instruction as well as activities carried out by the Appellant, it is therefore possible to hold that the Appellant is a clearing and forwarding agent providing clearing and forwarding operations services during the impugned period. Even if it claimed to be consignment agent that shall not go out of clutches of law since such term is also brought under the class of "clearing and forwarding agent" by inclusion of this term. Therefore claim of the Appellant that they were consignment agent and not liable to Service Tax was rightly discarded by learned Adjudicating Authority holding that it carried out clearing and forwarding operations on the basis of facts as well as statutory provisions contained in Section 65(25) and 65(105)(i) of the Act which came into force w.e.f. 16-7-1997. We reiterate that the nature of activity carried out by a clearing and forwarding agent if satisfies to be "clearing and forwarding operation", that only attracts the levy irrespective of the parties choosing to name the doer in any manner they like. The case of Coal Handlers Pvt. Ltd. v. CCE, Kol-I- 2006 (3) S.T.R. 286 (T-Kol) = 2004 (171) E.L.T. 191 (T) decided by this Tribunal had also view simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there shall be no taxation under the provisions of the Act. Except such a bald argument, there was neither any evidence adduced nor the Appellant proved its stand demonstrating before us how all these receipts were not relatable to the service of clearing and forwarding operatons provided to TISCO and TRL. Therefore each and every aspect of such claim calls for detailed examination on the basis of evidence. Their nature, live link and nexus to the principal service of clearing and forwar9ing operations shall be decisive. The learned Adjudicating Authority has merely held that above receipts were in relation to clearing and forwarding operations without bringing out relatability thereof by any cogent reason. In absence of any intimate connection or relation of expenditure to the principal activity of clearing and forwarding operations, those receipts may not assume the character of value of taxable service or contribute to that. If an expenditure is indispensable and inevitably incurred to provide a service, such cost should essentially form part of cost of service itself and shall contribute to value of taxable service. Thus expenditure incurred being incidental or ancillary t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by decision of Hon'ble Supreme Court in the case of Sony India Ltd. v. CCE, Del - 2004 (167) E.L.T. 385 (S.C.) cited by Revenue. The Hon'ble Supreme Court in para -7 held as under : "7. Now the other aspect that has to be considered is whether penalty imposed under Section 11AC and interest under Section 11AB was justified in the circumstances that arise in the case. The Commissioner had imposed penalty to an extent of Rs. 2,07,64,870.16 equivalent to the duty that was payable by the appellant. Under Section 11AC of the Central Excise Act, the manner in which the whole transaction went on makes it very clear that the appellant became liable to pay duty under the circumstances which warrant application of the provisions of Section 11A(i) and, therefore, we think if the authorities chose to impose penalty equivalent to duty payable by the appellant, we do not think, there is any justification for us to interfere with the same. The decisions adverted to by the learned counsel have different complexions and bearing. These cited cases arose in the circumstances where certain actions had been taken in bone fide belief or the parties were under bone fide doubt as to under what tar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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