2006 (10) TMI 452 - AT - Service Tax

Summary

Issues involved: Determination of whether the appellants' activity as an Indenting Agent should be treated as that of a Clearing and Forwarding Agent for the purpose of Service Tax.

Issue 1: The appellants' activity of Indenting Agent being treated as Clearing and Forwarding Agent u/s Order-in-Appeal No. 48/2003.

The appellants changed their activity to Indenting Agent and sought to cancel their license and cease payments. However, a show cause notice was issued asserting that the activity of Indenting Agent falls under the category of Clearing and Forwarding Agent. The appellants argued that they were not involved in handling or taking responsibility for goods, but only received and passed on orders. The Tribunal rejected their plea based on a previous ruling in the case of Prabhat Zarda Factory (India) Limited v. CCE, Patna. The matter was referred to a Larger Bench due to conflicting judgments. The Larger Bench, in the case of Larsen & Tourbo Ltd. v. CCE, Chennai, held that an Indenting Agent solely booking orders for the principal cannot be considered a Clearing and Forwarding Agent, and set aside the demands.

Issue 2: Reliance on the judgment and classification as a Del Credere Agent.

The appellants' counsel relied on the aforementioned judgment and argued that they operate as a Del Credere Agent, not falling under the category of Clearing and Forwarding Agent. Reference was made to the bench judgment in the case of Sreenidhi Polymers Pvt. Ltd. v. CCE, Bangalore-III and Raja Rajeshwari Intl. Polymers (P) Ltd. v. CCE, Bangalore.

Issue 3: Reiteration of findings by lower authorities.

The learned JDR reiterated the findings of the lower authorities regarding the appellants' activity and classification.

Issue 4: Consideration of the appellants' role as an Indenting Agent and the impact of the Larger Bench judgment.

Upon careful consideration, it was observed that the appellants did not physically handle or sell goods, nor were they responsible for their receipt or dispatch. They functioned solely as an Indenting Agent, akin to a Del Credere. The lower authorities had based their decision on the Prabhat Zarda Factory judgment. However, in light of the Larger Bench ruling in the case of L & T Ltd., which clarified that booking orders by an Indenting Agent does not constitute Clearing and Forwarding Agent services, the demands against the appellants were set aside, and the appeal was allowed with consequential relief.