SUPER SALES AGENCIES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE lower authorities have demanded Service Tax of over Rs. 81 lakhs from the appellants for the period September, 1999 to March, 2003 in respect of what is described as "Clearing and Forwarding Agent's service". The demand is on the "selling commission" received by the appellants from manufacturers of goods, in respect of which they had canvassed orders from the market and provided services in connection with the sale of the goods by the manufacturers to their buyers. The present application seeks waiver of predeposit and stay of recovery in respect of the above amount of tax and the penalties imposed on the applicant under Sections 75A and 76 of the Finance Act, 1994. It is submitted by the ld. Counsel for the appellants that they had not handled the goods at all and that their activity was limited to canvassing purchase orders from the market and transmitting the same to manufacturers and rendering allied services to the manufacturers without physically handling the goods. It is submitted that this activity would not fit into the definition of "C&F Agent's service". It is also pointed out that, after the introduction of 'Business Auxiliary service' for the purpose of levy of Service Tax, the appellants have got themselves registered with the department and that they have been paying tax accordingly ever since July, 2004. It is pointed out that the nature of service rendered by the appellants since July, 2004 is no different from the one they had been rendering prior to that. Hence according to ld. Counsel demand of tax on the appellant's service, dubbing it as C&F Agents service, is illegal. Ld. Counsel has, in this connection, relied on the Tribunal's decision in Commissioner of Central Excise, Kanpur v. Ram Shree Steels Pvt. Ltd. , wherein the respondents, whose activity was the same as that of the present appellants, were held not liable to pay Service Tax as "Clearing and Forwarding Agents". Reference is also made to a referral order in Larsen & Toubro Ltd. v. Commissioner of Central Excise, Mumbai 2006 (1) S.T.R.261 (Tri. -Del.), wherein the referring Bench disagreed with the decision of a Co -ordinate Bench in Prabhat Zarda Factory (India) Ltd. v. Commissioner of Central Excise and referred the issue to a Larger Bench. Ld. JCDR has relied on the decision in Prabhat Zarda Factory case (supra). He has particularly referred to Article 13 of the agreement between the appellants and their customer (manufacturer). This provision of the agreement made it obligatory for the appellants to ensure safe custody and proper storage of goods and to prevent any loss or damage which might happen to any such goods while in such custody. In rejoinder, ld. Adv. submits that the above provision of the agreement is only an ancillary provision providing for safe custody and storage of goods in certain eventualities and that it is not a provision governing the routine operation of the contract.

(2.) AFTER considering the submissions, we find that there are decisions of Co -ordinate Benches of the Tribunal holding that "C&F Agent's service" necessarily involves physical handling of the goods, whether direct or indirect. The decision to the contra in Prabhat Zarda Factory case has been disagreed with by the Co -ordinate Bench and the conflict of decisions is now before Larger Bench. Prima facie, we are also in agreement with the said disagreement. Apart from this, we have not come across any finding in the orders of the lower authorities to the effect that the appellants had actually handled the goods in a manner expected of C&F Agents. The appellants have made out prima facie case for waiver of predeposit and stay of recovery. It is ordered accordingly. There will be waiver of predeposit and stay of recovery in respect of the tax and penalty amounts.