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of <h1>Tribunal rules in favor of M/s. Bayforge Ltd., exempting them from service tax liability for Clearing and Forwarding Agents services.</h1> <h3>Bayforge Ltd. Versus Commissioner of Central Excise, Pondicherry</h3> Bayforge Ltd. Versus Commissioner of Central Excise, Pondicherry - [2009] 19 STT 300 (CHENNAI - CESTAT), 2009 (14) S.T.R. 210 (Tri. - Chennai) Issues:- Whether the appellants are liable to pay service tax for 'Clearing and Forwarding Agents' service rendered during a specific period.Analysis:1. The appeal was filed by M/s. Bayforge Ltd. challenging the demand of service tax amounting to Rs. 1,44,605 for the service rendered as 'Clearing and Forwarding Agents' during 2002-03 and 2003-04.2. The appellants acted as agents in India for an Italian company, procuring orders for the products manufactured by the Italian principal. The appellants contended that they did not handle any goods of the principal, only procuring orders against which goods were supplied by the principal to customers.3. The appellants argued that their activity did not fall within the scope of 'Clearing and Forwarding Agents' service, citing a decision by the Larger Bench of the Tribunal in Larsen & Toubro Ltd v. CCE. The Tribunal in that case held that an agent procuring purchase orders on a commission basis was not a 'Clearing and Forwarding Agent'.4. The Circular No. B43/797-TRU dated 11-7-1997 by CBEC clarified the activities falling under 'Clearing and Forwarding Agency', including receiving goods, warehousing, dispatch orders, arranging dispatch, record maintenance, and preparing invoices on behalf of principals.5. Upon reviewing the agreement between the appellants and the Italian principal, it was found that the appellants did not engage in any activities mentioned in the circular. The Tribunal concluded that since the appellants were only procuring orders and not handling the clearing and forwarding of goods, they were considered commission agents, not 'Clearing and Forwarding Agents'.6. The Tribunal set aside the impugned order demanding service tax from the appellants, stating that the appellants were not 'Clearing and Forwarding Agents' based on the activities they performed. The appeal was allowed in favor of the appellants, emphasizing that the demand for service tax was not sustainable in this case.
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