MALHOTRA DISTRIBUTORS PVT. LTD. Vs. C.C.E.

JUDGEMENT

(1.) THE appeal is directed against Order -in -Appeal No. BR(70)9/STC/2006, dated 13 -12 -2006 passed by the Commissioner of Central Excise (Appeals), Mumbai. The appellant M/s. Malhotra Distributors Pvt. Ltd. (MDPL) entered into an agreement with M/s. Vidyut Metallics Ltd. (VML) for rendering assistance in the marketing of goods produced by the latter by obtaining orders and also ensuring that the goods are sold at the terms and discounts as specified by VML. For the services rendered, they were getting a commission from M/s. VML. The department was of the view that the services rendered by the appellant is classifiable under the category of 'Clearing and Forwarding Services' and accordingly, a Service Tax demand of Rs. 61,16,009/ - was confirmed for the period October, 1998 to September, 2000 along with interest thereon. Penalties under Sections 76, 77 and 78 of the Finance Act, 1994 were also imposed on the appellant. The appellant preferred an appeal before the lower appellate authority, who vide the impugned order dismissed their appeal and hence, the appellant is before us.

(2.) THE learned Counsel for the appellant submits that as per the agreement entered into with M/s. VML, they were procuring the orders for the goods from the stockists and were forwarding the same to the manufacturer for which they get a commission @ 3.7% of the net sale value from M/s. VML. They rendered only services relating to marketing of the goods and did not deal with the goods in any manner and as per the circular issued by the C.B.E. & C. vide Circular No. 87/97/10/Service Tax/97 issued in July, 97, the scope of clearing and forwarding service has been clarified as follows: - -

(3.) WE have carefully considered the submissions made by both sides.