2008 (5) TMI 32 - AT - Service Tax

Demand - Clearing and Forwarding Agent - During the pendency of the matter before the Commissioner (Appeals), CCE revised Adjudication order & enhanced penalty - Commissioner (Appeals) held that the Appellants are Commission Agent not C/F Agent , so demand is not sustainable - order of the Commissioner (Appeals) was not challenged by the Revenue before the Appellate Authority - As the demand is not sustainable, enhancement of penalty by the Revision order is also not maintainable

Summary

Issues:
1. Tax demand on the Appellant as a "Clearing and Forwarding Agent" under Section 65(25) of the Finance Act, 1944.
2. Imposition of penalty under Section 76 and 78 of the Act.
3. Classification of services rendered by the Appellants as a "Commission Agent."
4. Revision of the Adjudication order by the Commissioner.
5. Challenge against the Revision order before the Tribunal.
6. Sustainability of tax demand and penalty enhancement.

Analysis:
1. The Show Cause Notice was issued to the Appellant proposing tax demand as a "Clearing and Forwarding Agent" under Section 65(25) of the Finance Act, 1944. The Adjudicating Authority confirmed the tax demand and imposed a penalty equal to the tax amount. However, the Commissioner (Appeals) set aside the Adjudication order, stating that the services rendered by the Appellants fall under the definition of a "Commission Agent" and that the demand for the period before the service was brought under taxable net is not sustainable.

2. The Commissioner revised the Adjudication order and enhanced the penalty while the matter was pending before the Commissioner (Appeals). The Appellants appealed against the Revision order before the Tribunal, challenging the penalty enhancement.

3. Upon hearing both sides, the Tribunal found that the Commissioner (Appeals) had correctly classified the services of the Appellants as that of a "Commission Agent" and deemed the tax demand unsustainable. Notably, the Revenue did not challenge the Commissioner (Appeals) order before the Appellate Authority, leading to the conclusion that the enhancement of penalty through the Revision order is also not justifiable.

4. Consequently, the Tribunal set aside the order of the Commissioner of Central Excise, ruling in favor of the Appellants. The Appeal was allowed with consequential relief, emphasizing the unsustainability of the tax demand and penalty enhancement. The decision was pronounced in the open Court, providing clarity on the matter.