VOLTAS LIMITED Vs. CCE

JUDGEMENT

(1.) R.K. Abichandani, J. (President) 1. The applicant seeks stay of that portion of the impugned order -in -appeal dated 29.3.2005 passed by the Commissioner of Central Excise (Appeals), Coimbatore, which is prejudicial to the interest of the applicants and prays for waiver of pre -deposit of service tax of Rs. 2,80,02,300/ - and penalties of Rs. 57,61,500/ -. Rs. 500/ -. and Rs. 100/ - per day of default.

(2.) On gathering intelligence, the Excise Officers visited the premises of the appellants to ascertain whether the appellants provided any service under the head "Clearing and forwarding agent". It transpired that the appellant was the selling agent of certain companies. It was noticed that the appellant rendered certain services on commission basis to their principal, which fell in the category of "Clearing and forwarding agents", but failed to register with the Central Excise Department as a service tax assessee. The Excise officers gathered the relevant records for the period from 1.9.99 to 30.6.2003 and were of the view that the service provider had raised the debit notes for collection of commission to the tune of Rs. 208.75 Lakhs during the period after 13.5.2003, which attracted service tax @ 8% ad -valorem and the remaining amount of Rs. 5266.46 Lakhs attracted service tax @ 5% ad -valorem on the basis of the material gathered and the terms and conditions of the agency agreements entered into by the appellant with various principals. Show cause notice was issued on the appellant as to why the service tax of Rs. 2,80,02,300 should not be demanded from them under Section 73 (I)(a) with interest thereon under Section 75 thereof, and why penalty should not be imposed against them for failure of registration, non -payment of service tax, non -furnishing of prescribed return etc. under Section 75(A), 76, 77 and 78. The Dy Commissioner, on the basis of the material on record, confirmed the said demand and imposed the penalties as stated above. The findings came to be upheld by the Commissioner (Appeals) under the impugned order.

(3.) The learned Counsel for the appellant contended that the appellant was only a selling agent and he was not concerned with any clearing and forwarding operations. It was submitted that the appellant had only to procure firm orders for the manufacturer, and the delivery was to be taken by the buyers from the said principal. It was submitted that the appellant was not concerned with the delivery of the product to the buyers and, therefore, was not even remotely concerned with any clearing and forwarding operations. It was submitted that the appellant was paid commission only on successful sales being made and the machineries were dispatched directly from the principals' premises to the buyers and the buyers themselves took delivery of the machineries from the principals. The appellant did not stock and sell the machineries for any of the principals and the consideration received was only by way of a sale commission. It was submitted that the transport was organised by the buyers to collect the machines from the works of the principals. It was submitted that the appellants were neither clearing nor forwarding agents having regard to the dictionary meanings of those words. The learned Counsel placed reliance on the decision of this Tribunal in Mahavir Greneries Vs. CCE, Bangalore in support of his submission pointing out that in context of similar agreement where a new agent was appointed on relevant terms, which were set out in paragraph -7 of the order, the Tribunal held that the appellant before it, was not a clearing and forwarding agent and that, unless its service could be treated as one to a client by a clearing and forwarding agent, in relation to clearing and forwarding operations, in any manner, the service cannot be taxed even if the consignment agent was brought under the definition of "clearing and forwarding agent". It was submitted that the Appellate Commissioner had wrongly relied on the decision of this Tribunal in Prabhat zarda Factory (India) Ltd. Vs. CCE, Patna, reported in 2002 (145) ELT 222 (CESTAT -Kolkata), by ignoring the fact that the appellant therein were selling agents of the principals, who undertook sales of machines on behalf of the principals, who undertook sales of machines on behalf of the principals. It was emphasised that the appellant did not undertake any activity in relation to clearing and forwarding operations.