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TMI Blog2017 (12) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... clude that the assessee was engaged in 'clearing and forwarding' service are such activities as are not involved either with clearing of goods or with forwarding of any goods to any destination or person. Rather, those activities are only ancillary or supplementary to the activity of commission agency as they only seek to ensure prompt placement of orders; prompt supply of goods and prompt payment against such supplies etc. These are all arising from contract of commission agency. In any case, those activities are not such as may be linked with any of the activities required to be performed to treat the service as "clearing and forwarding" service. Appeal dismissed - decided against Revenue. - Central Excise Appeal No. 110 of 2017 - - - Dated:- 28-11-2017 - Hon'ble Bharati Sapru And Hon'ble Saumitra Dayal Singh, JJ. For the Appellant : Pratik Chandra, R.C. Shukla For the Respondent : Nishant Mishra ORDER Heard Sri Pratik Chandra, learned counsel for the appellant and Sri M.P. Devnath, Sri Vivek Sharma and Nishant Mishra, learned counsel for the respondent. This appeal under Section 35 G of the Central Excise Act, 1994 has been filed by the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Distillery'. 5. Commission : In consideration of the services rendered by the Commission Agent under this letter, Rampur Distillery shall pay to the Commission Agent a commission of ₹ 1/- (Rupee One only) per B.L. In case of Extra neutral Alcohol (ENA) Rectified Spirit (RS) or at the rates which will be decided after mutual consent of both the parties, on the sales of the products as against orders given by the Commission Agent from time to time. 9. We find from records that appellant entered into an agreement with the said Rampur Distillery on 31st March, 2001 for providing essential and related supervision of transport services to M/s Rampur Distillery. The relevant portion that for arise for consideration are as follows:- 1.2 Supervision of transportation for the dispatches of Products means the supervision of transportation for the dispatches of Contessa Rum to be provided by the Representative to RAMPUR DISTILLERY pursuant hereto, and during the subsistence of the agreement, which supervision of transportation for the dispatches of Products are described herein below and include such supervision as may be identified from time to time, and agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he representative. iv) The REPRESENTATIVE shall not vary the terms of payments for the supplies made, without the period consent of RAMPUR DISTILLERY. The payments shall be made in such manner as may specify, in this behalf, RAMPUR DISTILLERY reserves the right to specify different terms and conditions for different customers. 4.1 In consideration of the supervision of transportation for the dispatches of products by the Representative under this Agreement, RAMPUR DISTILLERY shall pay to the Representative contract charge in the form of supervision charges, to be notified from time to time, on the dispatch of the product by RAMPUR DISTILLERY. These may be disbursed from time to time at the sole discretion of RAMPUR DISTILLERY, RAMPUR DISTILLERY reserves from time to time at its sole discretion. 4.2 The compensation shall become due for payment and shall depend upon the due realization of all goods, due to RAMPUR DISTILLERY upon the supplies made. 4.3 The present rate of such charges shall be Rs. Ten only (₹ 10/-only) per case on dispatch of Contessa Rum. 10. As regards, the agreement entered with on of the other parties i.e. M/s Holosticks India Ltd, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid contracts the Assistant Commissioner (Adjudication) in his order had concluded that the contract was one to provide clearing and forwarding service under Section 65(105)(zzzzq) of the Finance Act, 1994 (hereinafter referred to as the Act). Upon appeal the Commissioner (Appeals) affirmed the order-in-original (adjudication order). The order of the Commissioner (Appeals) was challenged by the assessee in appeal before the Tribunal. A difference of opinion had arisen between two members of the Tribunal. The Judicial Member of the Tribunal who had first heard the appeal, allowed the appeal of the assessee relying on a trade circular issued by the Central Board of Excise Customs as also a larger bench decision of the Tribunal in the case of Larsen Toubro Ltd. Vs. Commissioner of Central Excise, Chennai reported in 2006 (3) STR 321 (Tri-LB). On the other hand the Technical Member reasoned that the assessee was providing service in the nature of 'clearing and forwarding agency'. He also relied on another order of the Tribunal in the case of Medpro Pharma Pvt. Ltd. Vs. CCE, Chennai reported in 2006 (3) STR 355 (T-LB). Upon such difference of opinion, the matter was ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to point out the definition of 'forwarding agent', as known in legal parlance, from Black's Law Dictionary (Seventh Edition), which is as under:- forwarding agent. 1. A person or company whose business is to receive and ships goods for others- Also termed freight-forwarder. 2. A freight-forwarder who assembles less-than-carload shipments 'small shipments'- into carload shipments, thus taking advantage of lower freight rates. The Penguin Business Dictionary defines this expression in the following words: Forwarding agent. A General Agent who specializes in moving goods from a factory or port of entry to their proper destination. Such an agent normally owns the transport necessary for this work and often arranges FREIGHT and Customs formalities for his principal. In Fourth Edition of Halsbury's Law of England (Volume 5), the characteristics of 'forwarding agents' are narrated in the following manner: 442. Characteristics of forwarding agents:- A forwarding agent is one who carries on the business of arranging for the carriage of goods for other people. It must be clearly understood that a forwarding agent is not, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as Customs clearance. He is not liable for the failings of persons with whom he makes contracts on behalf of his principal, unless he know of those failings and ought to have taken action either to remedy them or at least to inform his principal so that damage might be avoided or mitigated: thus he is under no duty to supervise the actions of carriers whom he reasonably and properly expects to perform their normal obligations competently. In ordinary transactions a forwarding agent is not liable for failing to insure the goods, in the absence of instructions from his customer to do so: but he may, in certain circumstances, be liable for not consulting his customer and advising him as to the proper transport and insurance arrangements which should be made for valuable goods. A forwarding agent is not normally personally liable to pay the charges of carriers whom he engages to carry the goods on behalf of his principal; but there is a Custom of the London freight market that forwarding agents incur personal liability to shipowners for the payment of freight or of dead freight for booked space left unfilled. A forwarding agent who tenders dangerous goods to carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er impugned in this appeal has been specifically approved by the Supreme Court. Further, it has been held that for a service to qualify as 'clearing and forwarding service', the activity must pertain not only to clearing of the goods but thereafter it must also include forwarding of those goods to a particular destination at the instance and on the direction of the principal. It may also include warehousing of the goods, receiving dispatch orders from the principal, arranging dispatch of the goods as per instructions of the principal by engaging transport on his own or through transporters of the principal agency, maintaining records of the receipt and dispatch of the goods and stock available at the warehouse and prepared invoices. According to him, the observation made in this regard made by the larger bench of the Tribunal in the case of Larsen Toubro Ltd. (supra) was specifically approved by the Supreme Court inasmuch as it was observed that the larger bench rightly enumerated activities that a clearing and forwarding agent is supposed to perform. Having heard learned counsel for the parties we find the decision of the Supreme Court in the case of Coal Handlers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from the various other parties, with whom no agreements were made, the authorized signatory in his statement dated 17.02.2004 has admitted the following tasks: (a) procurement of orders, (b) ensuring execution, (c) pursuing the customers for making payment of supplies made (vi) The authorized signatory in his statement dated 17.02.2004 has also described the responsibility under agreement dated 31.03.2001 with M/s Rampur Distillery by referring to the task, namely, supervising the transportation of dispatches including making necessary arrangement for transportation of the products of M/s Rampur Distillery as and when required. The reasoning given by Technical Member is inconsistent with the reasoning given by the Supreme Court in the case of Coal Handlers Pvt. Ltd. (supra). Besides procurement of orders, the Technical Member has found that the assessee pursued the purchaser to make early payment to its principal as also raised certain debit note on the principal to make payment of its commission and other similar tasks. Thus, all the activities that have been noted by the Technical Member to conclude that the assessee was engaged in 'clearing and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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