AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (5) TMI 96
X X X X Extracts X X X X
X X X X Extracts X X X X
....ability, deposit of an amount of Rs. 26,07,629/- (Rupees twenty-six lakh seven thousand six hundred twenty-nine only), made by the appellant prior to adjudication was ordered to be appropriated. (iii) Penalty @ Rs. 100/- (Rupees one hundred) per day during continuance of failure to comply with the law was imposed under Section 76. (iv) Penalty of Rs. 100/- (Rupees one hundred) per day for failure to comply with the law during 1-9-99 to 16-7-01 and Rs. 1000/- thereafter was imposed u/s 77. 2.1 On the basis of search on 19-4-2002 (as per Authorisation at Page 40 of Paper Book), followed by investigations from time to time, Show Cause Notice (SCN) dated 10-9-2004 (issued on 13-9-2004) was served on the Appellant charging that services provided by the Appellant to its clients fall under the class of "clearing and forwarding" and such service was liable to tax under the Act as well as penalty and interest for default to comply with the law. Granting opportunity of hearing to the Appellant and on consideration of the agreement dated 21-11-2002 executed between it and M/s. TISCO and similar such agreement with M/s. Tata Ryerson (I) Ltd. (TRL), as well as materials on record and defenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or other incidental charges. Demurrage, wharfage and / or other incidental charges due to non-placement of wagons in the right position or due to road condition in the rainy season shall also be borne by the noticee. Payment shall be consolidated and shall include the charges incurred by the noticee in connection with the booking of/or taking delivery of materials. (4) Responsible for damage to the rolling stock of the railways or to the property of TISCO lying at the formers premises and such claims shall be adjusted against the bills/dues of the noticee. (5) Unload and transport the incoming materials from the public sidings to the premises of the noticee and shall be responsible for shortages found at the time of unloading at the premises of the noticee. (6) Precluded from stacking any other party's materials in his premises and in case of mixing with other party's materials, compensation shall be paid by the noticee. (7) Responsible for shortage/demurrage due to non-transporting the materials from the railway siding to its own premises in time. (8) Employ its equipment, manpower etc. for handling materials. (9) Arrange and take all necessary steps for protection of TISCO'....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Cause Notice dated 13-9-2004 was not valid for raising the demand for the period from 1-9-1999 to 31-3-2004 as the Show Cause' Notice was issued under Section 73 sub-Section (1) as per para 18 of the Show Cause Notice, whereas under Section 73(1) demand could not be raised for more than one year. That the Appellant relied upon the Supreme Court decision in the case of Collector of C. Ex, Jaipur v. Alcobex Metals - 2003 (153) E.L.T. 241 (S.C.). (iv) Show Cause Notice is non est and hopelessly time-barred as held in the various decisions. In the present case, search and seizure having been conducted on 19-4-2002, summon issued on 26-4-2002, the Appellant submitted a detail about its activities on 2-5-2002, and such facts not having been adverted by the Department, the proceeding was time-barred. In the similar facts and circumstances in the following cases it was held that the Show Cause Notice is non est and time-barred: (a) Gammon India Ltd. v. Commissioner of Central Excise, Goa - 2002 (146) E.L.T. 173 (Tri-Mumbai). (b) M/s. Monika Electronics Ltd. & Others M/s. Onida Saka Ltd. v. CCE, Delhi - 2006 (204) E.L.T. 468 = 2006-TIOL-1296-CESTAT-DEL. (c) Vaspar Concepts (P) Ltd. v. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on any other reimbursement of expenditure. These cases as relied upon by the Appellant are given below: (a) Sri Sastha Agencies Pvt Ltd. v. Asstt. Commr. of C. Ex. & Cus., Palakkad- 2007 (6) S.T.R. 185 (Tri.-Bang.) (b) Bhagyanagar Services v. Commr. of C. Ex., Hyderabad - 2006 (4) S.T.R. 22 (Tri.-Bang.) (c) Comm. of Central Excise & Customs & ST, BBSR-I v. M/s. Nilalohita Enterprises - 2007 (6) S.T.R. 318 (Tribunal) = 2007-TIOL-680-CESTAT- Kol. (d) Sangamitra Services Agency v. CCE, Chennai - 2007 (8) S.T.R. 233 (Tribunal) = 2007-TIOL-1335-CESTAT-Mad. (e) K.D. Sales Corporation v. Commissioner of C. Ex., Belgaum - 2007 (6) S.T.R. 418 (Tri.-Bang.) (f) M/s. B.S. Refrigeration Ltd. v. Commissioner of Service Tax, Bangalore - 2006 (4) S.T.R. 103 (Tribunal) = 2006 TIOL-1189-CESTAT-Bang. (g) Jaylaxmi Enterprises v. CCE, Mangalore - 2007-TIOL-1905-CESTAT- Bang. (h) M/s. U.M. Thariath & Company M/s. S.J.C. Pharma v. The Commissioner of Central Excise, Cochin - 2007 (8) S.T.R. 161 (Tribunal) = 2007-TIOL-1605-CESTAT-Bang. (i) M/s. Marakadham Agencies v. The Commissioner of Central Excise, Salem- 2007-TIOL-1750-CESTAT-Mad. (viii) Tax was calculated over and above the value taken by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Revenue submitted that the learned Adjudicating Authority had very correctly assessed the Appellant and proper SCN was issued well within jurisdiction providing copies of all relied upon documents. Assistant Director, D.G.C.E.I., Kolkata Zonal Unit, Kolkata, was vested with all powers of the Central Excise Officer of the rank of Assistant Commissioner for whole of India in terms of Notification No. 3/04-S.T. dated 11-3-2004. The SCN having been issued on 13-9-2004, that was also well within limitation and jurisdiction. Entire amount received by the Appellant during the material period was in relation to "clearing and forwarding agency services". Plea of consignment Agency was discarded in view of nature of services provided. Therefore whole receipt was liable to tax and that was rightly done. Deductions claimed by Appellant did not justify for allowbility in accordance with law for which learned Commissioner by a reasoned and speaking order disallowed the same. 5.2 Shri Loni, also submitted that law relating to service tax for taxing the "clearing and forwarding agency" service having come into force w.e.f. 16-7-1997 and Board instruction in F. No. B.43/7/97-TRU dated 11-7-1997....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sdiction relating to issue of SCN did not survive for the reasons argued by the learned JDR repelling contention of the Appellant. The Notification stated aforesaid had empowered the Notice Issuing Authority to exercise powers of Central Excise Officer in respect of the respective jurisdiction. Accordingly Appellant's objection on this score fails. Also nothing could be found to observe whether the Appellant was deprived of due process of justice without providing all relied upon documents for its defence. Accordingly Appellant's reliance on the decision in the case of ETA Travel Agency Pvt. Ltd. v. CCE - 2007 (7) S.T.R. 454 (Tri-Bangalore) was misplaced. 6.3 Record reveals that search was conducted on 19-4-02 and that brought out material facts to light for issue of SCN. The Appellant entered into contracts with M/s. TISCO and TRL. Scope of activity was as depicted by the learned Commissioner at page 2-3 of order of adjudication and as extracted in Para - 3 of this order. That remained undisputed all along in the course of hearing. The Appellant sought registration under the Act w.e.f. 27-5-2002 and this was after the date of search i.e. 19-4-2002. It started paying taxes from 1-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tock available on the warehouse; (f) Preparing invoices on behalf of the principal. Clearing forwarding operations as normally understood by trade and commerce appears to have been understood by Board's Instruction as above. Thus such operation has not only taken into its fold all such activities expected to be carried out by an agent on behalf of his principal to make or ensure that goods manufactured or traded by that principal to reach his buyer or consignment Agent from his premises or elsewhere, but also the activities of making or ensuring goods to reach from a manufacturer/trader to the principal of such Agent, in any manner, is covered by the levy. All services in relation to such act provided directly or indirectly, incidental or ancillary to achieve the main object of clearing of goods and or forwarding thereof, in any manner, attract incidence of levy. It is not necessary that the goods should be in the custody or possession of the Agent while carrying out aforesaid operations. But it is such service activity which enables the goods to reach its destination and may be through a series of several sub-activities, incidental or ancillary to the principal activity of clear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a clearing and forwarding agent if satisfies to be "clearing and forwarding operation", that only attracts the levy irrespective of the parties choosing to name the doer in any manner they like. The case of Coal Handlers Pvt. Ltd. v. CCE, Kol-I- 2006 (3) S.T.R. 286 (T-Kol) = 2004 (171) E.L.T. 191 (T) decided by this Tribunal had also view similar to our view as aforesaid. However that decision is awaiting decision of Apex Court having been appealed and admitted - 2006 (4) S.T.R. J154 (S.C.). The Appellant's reliance on Mahavir Generics v. CCE, Bangalore - 2006 (3) S.T.R. 276 (Tribunal) = 2004 (170) E.L.T. 78 (Tribunal) = 2004-TIOL-344-CESTAT-DEL shall not be of any help to it for the reason that the same was rendered on given facts and circumstances of that case as discussed in Para-8 thereof. But in the present case, the nature of activity carried out by the Appellant as depicted in Para-3 aforesaid, does not grant the Appellant any immunity from the levy. 6.9 So far as the second issue of claim of deductions from the gross value of taxable service is concerned, modality of valuation of taxable service is provided by Section 67 of the Act. Value of taxable service is basis or me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s may not assume the character of value of taxable service or contribute to that. If an expenditure is indispensable and inevitably incurred to provide a service, such cost should essentially form part of cost of service itself and shall contribute to value of taxable service. Thus expenditure incurred being incidental or ancillary to perform an act, shall essentially make value addition to the service. Therefore claim of Appellant in respect of above three items need to be remanded for reexamination and finding with reason, granting fair opportunity of hearing to the Appellant. In view of remand, the citations made by the Appellant calls for consideration by the learned Adjudicating Authority. 6.11 The third issue relating to limitation was answered by the learned Adjudicating Authority negatively and against the Appellant. It is noticeable that the Appellant has not disputed nature of different services provided by it as depicted in Para 3 hereinbefore. There was search on 19-4-02. After that date only, the Appellant sought clarification from the Authority by its letter dated 2-5-02 (at page 41 of Paper Book) as to whether it was liable under the Act while seeking registration o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t think, there is any justification for us to interfere with the same. The decisions adverted to by the learned counsel have different complexions and bearing. These cited cases arose in the circumstances where certain actions had been taken in bone fide belief or the parties were under bone fide doubt as to under what tariff item they had to pay tax in question or where the assessee was under bone fide belief that his company was not required to be registered as dealer under the Sales Tax Act. In the present case, earlier the appellant was paying duty at the rate of 18% ad valorem on the maximum retail price. It is only after 2-6-1998 change was sought by the appellant by not printing the price on the packed goods by removing the same to their depots from their factory in order to claim that the packed goods had not been priced at the time of their removal from the factory and gifts were offered by the appellant to indicate that the consideration in the sale transaction was not solely the price. These factors, we think, were rightly taken note of by the authorities and the penalty imposed need not be considered in the present proceedings." Because penalty is prescribed by law, th....