COMMISSIONER OF CENTRAL EXCISE Vs. LALIT ENTERPRISES

JUDGEMENT

(1.) This appeal of the Revenue is against an order of the Commissioner (Appeals) setting aside a demand of Service Tax, which had been confirmed against the party by the original authority. The respondents rendered certain services to M/s. Grasim Industries Ltd., during the period 1999 -2000 to 2002 -03 in terms of a Service Agent Agreement entered into between them. The terms and conditions of this agreement are seen stated in a letter dated 1 -4 -1998 of M/s. Indian Rayon and Industries Ltd. (White Cement Division) - since taken over by M/s. Grasim Industries Ltd. - addressed to the respondents. This factual position is not in dispute. The scope of services to be rendered by the respondents under this agreement to M/s. Grasim Industries Ltd. is clearly discernible from this document. The relevant part of the document is extracted below :

(2.) After examining the records and hearing both sides, I find that the demand of tax raised on the respondents by the Department was on what was considered by the latter as covered by the definition of "Clearing and Forwarding Agent" under Section 65(16) of the Finance Act, 1994. This definition reads as under :

(3.) After giving my careful consideration to the case law cited before me, 1 find that the facts of the case of Prabhat Zarda Factory are proximate to the facts of the instant case. In that case, M/s. RZC was collecting purchase orders from dealers, for sale of various tobacco products of M/s. PZF and passing on such orders to the manufacturer and receiving commission for the services. After examining the definition of "Clearing and Forwarding Agent", which was couched in a language which admitted wide meaning and scope, the Bench held that the service rendered by M/s. RZC can be held to be a service rendered 'in relation' to clearing and forwarding operations 'in any manner'. Accordingly, the service was held to be taxable. In the instant case, there are sharper clues indicating that the services rendered by the respondents to M/s. Grasim Industries Ltd. were connected with the clearing and forwarding of goods of the latter. It is beyond the pale of doubt that such services squarely fell within the ambit of the definition of "Clearing and Forwarding Agent" under Section 65(16) of the Finance Act, 1994. After a perusal of the order passed by the Tribunal in Mahavir Generics (supra), I find that the facts of the case of Prabhat Zarda Factory (supra) were not correctly considered and distinguished. I am inclined to follow the ratio of the decision rendered by the Tribunal in the case of Prabhat Zarda Factory. Accordingly, the order of the original authority, which rightly followed Prabhat Zarda Factory (supra), has to be restored and the impugned order, which ignored Prabhat Zarda Factory has to be set aside. At this stage, it is noticed that the plea of limitation raised by the assessee was not considered by ld. Commissioner (Appeals). The claim of the party for the benefit of Section 80 of the Finance Act, 1994 against the penalty imposed on them by the original authority under Section 76 of the said Act was also not examined. The lower appellate authority has got to examine these issues and render a decision thereon.