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TMI Blog2018 (10) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of Section 65(25) of the Act. Demand set aside - appeal allowed - decided in favor of appellant. - ST/239/2009 - FO/76661/2018 - Dated:- 24-9-2018 - Shri P. K. Choudhary, Member (Judicial) And Shri Bijay Kumar, Member (Technical) For the Appellant (s) : Shri C. R. Das, Adv. For the Revenue : Shri D. Haldar, A. C. (A. R.) ORDER PER SHRI P. K. CHOUDHARY The facts of the case in brief are that the appellants are engaged in trading of Cement of M/s. Indian Cement Ltd., Hyderabad, a manufacturer of cement under the brand name Rassi . A Show Cause Notice dated 22/05/2007 was issued to the appellant for not having taken registration for providing services of C F Agent and for not filing Periodical Returns for the period from 22/09/2005 to 03/03/2006. 2. The Adjudicating Authority confirmed the demand of Service Tax of ₹ 1,15,679/- along with interest and imposed penalty of equal amount under Section 78, Penalty of ₹ 1,000/- under Section 77 and Penalty under Section 76 of the Finance Act, 1994. 3. On appeal, the Lower Appellate Authority upheld the Adjudication Order and rejected the appeal filed by the assessee. Hence, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in Prabhat Zarda (supra) was doubted by another Bench of the Tribunal and the said Bench referred the matter to the Larger Bench. On reference being made, the Full Bench of the Tribunal decided the issue and on the aforesaid aspect decision in Prabhat Zarda (supra) has been overruled by it. The judgment of the Full Bench is known as Larsen Toubro Ltd. v. Commissioner of Central Excise, Chennai - 2006 (3) S.T.R. 321 (Tri.-LB) : 2006 (110) ECC 634 : 2006 ECR 634 Tri.-Delhi. It gets revealed from the decision of the Larger Bench that after taking note of the definition of clearing and forwarding agent (which has already been extracted above), the Larger Bench observed that the service should be connected with clearing and forwarding operations. The clearing and forwarding operations would be various activities having bearing on clearance of goods, which would involve documentary processes and arrangements for transfer of goods to their destination, which process may also involve clearance at subsequent stages during forwarding operations. In the opinion of the Larger Bench, the procurer of orders on commission basis renders services which are not connected with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such goods or services; or undertakes any activities relating to such sale or purchase of such goods or services. This clearly shows that the activity of mere procurement of purchase orders for the principal on commission basis of a commission agent is treated separately by the Parliament from the activities of a clearing and forwarding agent. Activity of procuring orders is thus independent of clearing and forwarding operations. The agents doing these activities can be different. Moreover, clearing and forwarding operations do not flow directly or indirectly from mere procurement of orders. There is no obligation on the person procuring orders as a commission agent for the principal, only by virtue of that agency, to carry out clearing and forwarding operations in respect of the goods which are to be supplied pursuant to the orders so procured. 10. It appears to us that the expressions directly or indirectly and in any manner occurring in the definition of clearing and forwarding agent cannot be isolated from the activity of clearing and forwarding operations. A person may undertake to provide service of procurement of orders as agent of the principal without agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en overruled entirely, as is clear from the reading of para 11 of the judgment where the Larger Bench has said that Prabhat Zarda (supra) stands overruled to the extent of the aforesaid ratio laid down thereunder . His endeavour was to demonstrate that in the present case the Tribunal in the impugned judgment had rightly relied upon Prabhat Zarda (supra) and when the services rendered by the appellant are looked into, it would clearly fall within the definition of clearing and forwarding agent contained in Section 65(25) of the Act. Let us, therefore, examine whether services rendered by the appellant would qualify it as C F Agent? 10. It would be relevant 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 ship 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such cases they would have the rights and duties of carriers with respect to such carriage as they undertake personally, but the rights and duties of forwarding agents with respect to the remainder of the transit. 443. Rights and liabilities of forwarding agents. - The rights and liabilities of a forwarding agent are governed by the general principles of the law of agency : and so he is entitled to be indemnified against all expenses incurred on behalf of his principal and to be paid his proper charges for his services. He is liable for failure to make proper arrangements for the carriage and for ancillary matters which he has undertaken, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaging transport on his own or through the transporters of the principal, maintaining records of the receipt and dispatch of the goods and the stock available on the warehouses and preparing invoices on behalf of the principal. The Larger Bench rightly enumerated these activities which the C F Agent is supposed to perform. 12. On the facts of the present case, we find that none of the aforesaid activities are performed by the appellant. There is no role of the appellant in getting the coal cleared from the collieries/supplier of the coal. Movement of the coal is under the contract of sale between the coal company and Ambuja companies. Even the coal is loaded on to the railway wagons by the coal company. The goods are not under any legal detention from which they need to be freed by the appellant. Not only this, destination of the goods is known to the coal company and the railway rakes are placed by the coal company for the said destinations. The destination is the factories of the principal itself, namely, Ambuja companies, where the coal is to be delivered by the coal company as per pre-determined/agreed covenants between them. Therefore, there is no occasion for Ambuja ..... 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