2013 (29) 605 (Tri.- Kolkata) United Enterprises vs. Commissioner of Central Excise & Service Tax

Facts:
Appellant was described as consignment Agent by M/s. SAIL as per the Agreement dated 30-03- 2001. The appellant registered and paid service tax under the category of “Storage and warehousing services” for the year 2001-2002 and part of 2002-2003. But, later they discontinued payment of service tax. A show cause notice was issued to them alleging that they were the consignment agents of M/s. SAIL and were liable for service tax as “Clearing & Forwarding Agent”. As per the agreement, the appellants were required to render the services of ‘unloading of materials at Danapur/Fatuha or any other nearest operating Public siding, transportation of materials and unloading at consignment yard in the appointed place, stacking (including marking/painting) of materials as per stacking plan/storage guidelines and loading into customers vehicles for delivery. As per the agreement, the appellants provided services of transportation of iron and steel products from Fatuha Rail Goods to Banka Ghat Stockyard, wherefrom, importers of such goods from Nepal could collect the said goods. Appellants raised invoices for unloading, transportation and loading of the export consignment. Appellants were neither clearing the goods from the factory of M/s. SAIL nor forwarded the goods to anybody else. They carried out the activity of transhipment of goods meant for export. Appellant was of the view that his activities were covered under the category of cargo handling service. Appellant also contended that, mere mentioning the appellant as consignment Agent in the Agreement, ipso facto, cannot be the criterion for classifying the activities under the heading C & F Agents for the purpose of service tax. The intention, purpose, and activities rendered by the appellants, were alone relevant. Appellant further contended that, activity of Consignment Agent did not come under the purview of Clearing and Forwarding Agents. Penalty on director was also levied.

Held:
The activities were not limited to just loading and unloading of cargo but also involved stacking, which included marking/painting, loading, into customers’ vehicles for delivery with weighment and necessary documentation, carrying out stock verification during storage at the stock yard clearly indicated that the services fall under the scope of “Clearing and Forwarding Agent Services” as per section 65(25) and 65(105)(j) of the Finance Act, 1994. Service of consignment agent is specifically included in the scope of Clearing and Forwarding Services. Section 65(25) and 65(105)(j) of the Act. As per section 65A of the Act, the sub-clause providing most specific description is to be preferred to sub-clause providing a general description. After reading the Agreement between M/s. SAIL And the appellant, it is clear that appellant was appointed as Consignment Agent, which is specifically included in the definition of Clearing & Forwarding Agent services. In contrast, claim of the appellant that they are rendering cargo handling service to M/s. SAIL and accordingly classifiable under the Heading Cargo Handling service, is more general in nature than the specific service of a consignment agent included in the definition of C & F service. Accordingly, they were C&F Agents. Since the authorities did not record specific involvement of the director in short/non payment of service tax warranting a personal penalty on him, except holding that he was overall in charge of the affairs of the appellant company, the penalty was set aside.