Whether mere procuring orders amounts to rendering C&F service?

PJ/CASE LAW/2015-16/2786

Case:-COMMR. OF C. EX. & CUS., AURANGABAD VERSUS HOGANAS INDIA LTD.

Citation:- 2015 (37) S.T.R. 240 (Tri. - Mumbai)

Brief Facts:-This is an appeal filed by the Revenue against Order-in-Appeal No. BPS(327)158/2004, dated 15-9-2004 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad.
Vide the impugned order, the learned lower appellate authority has held that the services rendered by the sales representative appointed by the respondent, M/s. Hoganas India Ltd., Ahmednagar, will not come within the purview of ‘C&F Agency Services’ and consequently the demand of Service Tax for an amount of Rs. 2,96,800/- for the period 16-6-1997 to 31-8-1999 would not survive. Accordingly, he has set aside the confirmation of demand passed by the lower adjudicating authority vide order dated 31-5-2004. Aggrieved of the same the Revenue is before Tribunal.

Appellants Contention:- In their appeal memorandum, Revenue has urged that the activities undertaken by the sales representative would amount to ‘C&F Agency Services’ in view of the decision of the Tribunal in the case of Prabhat Zarda- 2002 (145)E.L.T.222 = 2006 (2)S.T.R.584 (Tribunal)and, therefore, the Commissioner (Appeals) has erred in passing the impugned order. Reliance is also placed on the decision of the Tribunal in the case of Mahavir Genericsv. Commissioner of Central Excise, Bangalore- 2004 (170)E.L.T.78 = 2006 (3)S.T.R.276 (Tribunal).

Respondents Contention:-The respondent submits that the decision of the Tribunal in the case of Prabhat Zarda (supra) was overruled by the decision of the Larger Bench in the case of Larsen & Toubro Ltd.- 2006 (3)S.T.R.321wherein it was held that, to come within the purview of ‘C&F Agency Services’ both the activities of clearing as well as forwarding should be undertaken and, therefore, the appeal filed by the Revenue would not survive in view of the Larger Bench decision.

Reasoning Of Judgement:-The tribunal have perused the records and notice that in the present case the sales representatives appointed by the respondent were only canvassing orders and they were not received or clearing and forwarding the goods manufactured by the appellant. For canvassing the orders and pursuing the delivery of the goods, the sales representatives were paid a commission. This activity of the sales representative, by no stretch of imagination, can be called clearing and forwarding service and, therefore, tribunal do not find any infirmity in the order passed by the lower appellate authority.

In view of the above findings, the appeal filed by the revenue was dismissed as devoid of any merits.

Decision:- Appeal dismissed.

Comment:- The gist of the case is that for a service to be treated as ‘Clearing and Forwarding Agent Service’, it is necessary that both the activities of clearing as well as forwarding should be undertaken. In the present case, the sales representative was only engaged in canvassing orders and did not received goods for clearing and forwarding to the customers and so the service tax demand was dropped.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2786

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