TaxTMI 
TaxTMI 
2009 (5) TMI 71
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....or marketing the products. Both BMF Belting and Fenner dispatch the goods from their respective factories to the depots/marketing network/distribution network of the appellants. Selling/distribution agreement was entered into between the appellants and BMF on 01.04.1995. "1. The salient terms of the agreement are as follows:- 2. BMF is manufacturing the products detailed in the Schedule I to this agreement and FIL has established a pucca distribution system and marketing outlet and BMF is desirous of utilizing the facility and FIL have agreed to provide the same, this agreement has been entered into with the following terms and conditions. 3. Whereas there has been a verbal arrangement between the abovesaid parties for payment of 3% distribution expenses and 2% handling charges for the purposes mentioned in this agreement This agreement is now reduced in writing for continuance of this arrangement for a further period of 5 years or till terminated by a notice in writing by BMF or by FIL giving 60 days prior written notice. 4. FIL has agreed with BMF by this agreement to handle and distribute the products manufactured by BMF and those that may be added to its range of pr....
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....ion BMF shall pay FIL any outstanding amounts due to the latter at the date of termination. 16. … …. … 17. … … … 18. On the termination of this agreement for any reason, FIL shall return all unsold goods to BMF and render accounts and settle the same from the date of last settlement till the date of cancellation of the agreement. 19. … …. …. 20. It is hereby declared by BMF and FIL that the above arrangement shall not be deemed as a Sold Selling Agency Agreement and is only intended to avail the distribution and handling facility provided by FIL." 2. The terms of payment were modified by supplementary Memorandum of Understanding on 01.04.1997 as per which, BMF was to pay 5% of the total turnover achieved by Fenner, towards distribution expenses and another 21/2% towards of handling of incidental expenses. The terms of payment were further modified on 01.04.2000 according to which BMF was to share the actual expenses on sales, distribution and incidental expenses in proportion to the turnover of their products. 3. Excise Audit was conduct....
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.... of distribution system and marketing outlet of the appellants on payment of expenses towards distribution and handling/incidental expenses. (c) The payments received by Fenner are only in respect of services rendered by them to BMF in selling products by way of allowing them to utilize their established distribution system and marketing outlet. (d) BMF was to supply goods to places and warehouses as directed by the appellants. (e) The unsold goods were required to be returned on termination of the agreement. (f) The Revenue relied upon the decision of the Tribunal in Prabhat Zarda Factory (India) Ltd. Vs Commissioner of Central Excise, Patna[2002 (50) RLT 326 (CESTAT-Kol.) = 2002 (145) E.L.T. 222 (Tri.-Kolkata)]. 8. We find that the scope of the contract between the appellants and BMF does not cast any obligation whatsoever on the appellants to provide clearing and forwarding services. The agreement is for marketing goods manufactured by BMF using distribution and marketing outlets of the appellants of whom BMF was the subsidiary. The goods are sold to various buyers at depots and the appellants do not perform any clearing and forwarding service. The products meant ....
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....as 'forwarding agent' without rendering any service as 'clearing agent' and he be deemed to have rendered both services would amount to replacing the conjunctive 'and' by a disjunctive which is not possible. The counsel for the Revenue has not been able to bring on record any material to show the word 'and' should be construed as disjunctive. He has not shown any 'trade practice' which may lead to a necessary inference that service of one kind rendered by one is invariably considered to comprise both. No argument has been advanced before us by him to canvass that the legislature intention is discernible from the scheme of the statute or from any other relevant material. Therefore, the word 'and' should be understood in a conjunctive sense. (See Maharaja Sir Pateshwari Prasad Singh v. State of U.P. (1963) 50 ITR 731). In these circumstances, if we read the word 'and' as 'or' then it would amount to doing violence to the simple language used by Legislative which cannot be imputed ignorance of English language. In that regard, we place reliance on the judgement of Hon'ble the Supreme Court rendered in the case of Inayat Ali Khan v. State of U.P. (1971) 2 SCC 31 (Para 5) and Para 6 of ....