Section 37 B Order No.2/1/2002-ST
F.No.137/04/2002 CX.4
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
24th April, 2002.
37 B Order No.2/1/2002-ST
Subject:- Providing service
of storage facility and charging rent for Storage
of liquid cargo in tanks - whether liable to service tax as C&F
Agents, - regarding.
In exercise of the powers conferred under Section 37 B of the Central Excise
Act, 1994 (as made applicable to Service Tax by Section 83 of the Finance
Act,1994), the Central Board of Excise & Customs considers it necessary, for
the purposes of uniformity in connection with classification of services, to
issue the following instructions.
2.
Doubts have been raised as to whether service of
storage facility and charging rent for storage of liquid cargo in tanks,
provided by certain agencies, can be considered as a service provided by 'clearing
and forwarding agents' or not.
3.
This matter was raised by four such agencies before
the Mumbai High Court in Writ Petition Nos.170/2002, 171/2002, 2962/2001 &
2994/2001. The petitions were disposed of by Hon'ble Court with directions to
the Central Board of Excise & Customs to pass appropriate speaking
clarification and/or, orders after hearing the petitioners.
4.
The agencies were accordingly heard in the matter on
19th March, 2002 and on 3rd April.
5.
Views of DGST and concerned Commissioners of Central
Excise have also been obtained.
6.
It is observed that the above agencies are engaged
in the activity of providing storage (tanks) facility for liquid cargo which has
been imported or is intended for export. They charge rent for storage of liquid
cargo deposited with them.
7.
It is observed that, as per Section 65 of Finance
Act, 1994 'Clearing & Forwarding Agent' means "any person who is
engaged in providing any service, either directly or indirectly connected with
the clearing and forwarding operations in any manner to any other persons and
includes a consignment Agent". Further, 'taxable service' with respect
to C&F Agents means, any service provided to a client by a clearing and
forwarding agent in relation to clearing and forwarding operations, in any
manner.
8.
The issue is whether the activity/service of providing storage facility and
charging rent, for storage of liquid cargo in tanks, can fall under the category
of 'Clearing and Forwarding' operations as defined under Section 65 of
Finance Act, 1994.
9.
The main point raised by the agencies is that they
are not at all rendering any clearing and forwarding services and hence they do
not come under the category of clearing and forwarding agents. They simply issue
Invoices/Bills to their customers towards storage charges only and for no other
charges.
10.
The matter has been examined. Normally, a C&F
agent receives goods from the factories or premises of the Principal or his
agents, stores these goods, despatches these goods as per orders received from
the Principal or owner, arranges transport, etc. for the purpose and prepares
invoices on behalf of the Principal. For this service, the C&F agents
receives commissions on the basis of agreed terms. Therefore, an essential
characteristic of any services, to fall in the category of C&F agent, is
that the relationship between the service provider and receiver should be in the
nature of principal(owner) and agent. The C&F agent carries out all
activities in respect of goods right from stage of their clearances from the
premises of the principal to its storage and delivery to the customers.
11.
However, in the cases under consideration, the
agencies are providing only storage facility for liquid cargo which has been
imported or is intended for export. They charge rent for storage of liquid cargo
deposited with them. They are not connected with the vessel bringing the goods
and are not concerned with customs formalities. They issue invoices to customers
towards storage charges and for no other charges. These agencies are not
receiving any commission from the principal but only rental for storage
facility, whereas a C&F agent's remuneration is in the form of commission.
The transactions between the parties are not transactions between principal and
an agent but between principal and principal. These agencies are neither
receiving any despatch orders from the owners of the goods, nor are they
arranging for the despatch of goods as per their directions by engaging
transport, as is done normally by C&F agents. They are also not carrying out
any service directly or indirectly in connection with clearing and forwarding
operations. Therefore, services rendered by such agencies, in relation to
storage of cargo, can not be considered to be in the nature of 'clearing and
forwarding' agent and such agencies cannot be considered as "clearing and
forwarding agents".
12.
However, under the Finance Bill, 2002 "storage and warehousing services for
goods including liquids and gases" is proposed to be made to liable to
service tax. Section 65 (87) of the proposed amended Finance Act, 1994, defines
"storage and warehousing" to include storage and warehousing services
for goods including liquids and gases but does not include any service provided
for storage of agricultural produce or any service provided by cold storage.
Therefore, as and when these provisions of the Finance Bill come into effect the
above types of cases shall be liable to service tax under the head "storage
and warehousing".
13.
Suitable Trade notice may be issued for information of trade and field
formations.
14.
The receipt of this order may kindly be
acknowledged.
15.
Hindi version will follow.
A.K.Prasad
Director (CX.4)
Tel: 3012812
Fax: 3792965
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