2019 (2) TMI 409

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....inerals. They exported iron ore produced by another PSU VZ., M/s NMDC Ltd. Department seeks to charge service tax on the exports made by the appellant during the period July, 2003 to March 2006 under the head "Business Auxiliary services" holding that the appellant was acting an agent of M/s NMDC in promoting their business. Accordingly, a show cause notice was issued and the demand was confirmed by the Commissioner of Central Excise and Service Tax- Visakhapatnam, along with interest and a penalty was imposed under Section 78. Hence this appeal. 2. Learned Counsel for the appellant takes us through the nature of the business transaction and argues that they are not acting an agent of M/s NMDC Ltd., but have been purchasing from M/s MMTC....

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....done in the name of MMTC and the export proceeds are realized by the MMTC through of letter of credit in the banking channels from their overseas buyers. After retaining their fixed percentage of 3% from the sale proceeds, the remaining amount is paid to NMDC. The entire export documentation is made under the name of MMTC. There is no doubt that the documents and records were maintained in such a way that the transactions are on principal to principal basis. This can be gauged from the fact that the annual accounts, export documents, income tax returns, sales tax returns/assessment orders etc., displayed that the iron ore was produced from NMDC by MMTC for onward export. The thrust of the defense is on the premises that the sale is done on ....

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....to the loading of the shipping were on account of NMDC only when the title of the goods is transferred to MMTC. Therefore, it cannot be said to a sale in a normal course. He further argues that the price which is paid for the goods in any transaction cannot depend on the price which the buyer gets from his customers. Although, the ledgers and invoices showed the NMDC as the supplier and MMTC as the buyer; in fact, MMTC is only acting an agent of NMDC working on 3% margin to promote export of their product. Therefore, they are fully liable to be charged under the head of Business Auxiliary service and the appeal is liable to be dismissed. 5. We have considered the arguments on both sides and perused the records. We find that this case is ....