MAHAVIR GENERICS Vs. CCE

JUDGEMENT

(1.) THIS is an appeal at the instance of the assessee challenging the order passed by Commissioner of Central Excise (Appeals) in the matter of liability to pay service tax.

(2.) UNDER an agreement dated 1.1.97 with M/s. Cipla Limited, manufacturer of pharmaceutical generic products, appellant had been functioning as their consignment agent for sale of their products throughout India. When service tax was introduced on Clearing and Forwarding agent service under Chapter 5 of Finance Act 1944 w.e.f. 16.7.97 the appellants got themselves registered with the Central Excise authorities and started paying service tax on the commission received by them from M/s. Cipla Limited as consignment agents. It is contended that later on realizing that the services rendered by them would not amount to a taxable service as one rendered by a Clearing and Forwarding agent the surrendered the certificate of registration under letter dated 29.1.2001. The Assistant Commissioner of Central Excise, Service Tax Cell, Bangalore -I Commissionerate vide his order dated 31.12.2001 directed the appellant to continue their registration as Clearing and Forwarding agent and to comply with the provisions of Finance Act, 1994 and the rules thereunder. The appeal filed by the assessee was dismissed by the Commissioner (Appeals) under the order impugned. The issue that comes up for consideration in this appeal is whether the service rendered by the appellant in terms of its agreement with M/s. Cipla Limited would come within Section 65(105)(j) of the Finance Act, 1994, as amended.

(3.) THE learned counsel for the appellant took us through the terms of the agreement with M/s. Cipla Limited and contended that under the agreement they are not providing any service to a client in the nature of clearing and forwarding operation. Even if the consignment agents are brought under the definition of "clearing and forwarding agents" unless the service rendered by a consignment agent is made taxable by making it a taxable service under Section 65(105), there will be no tax liability on the appellant. In support of their contention that the appellant is not doing any service as clearing and forwarding agent, the learned counsel referred to the meaning of the term "forwarding agent" under different dictionaries and Halsbury's Laws of England.