News Flash
  • Application of 'own merit' rule for determining seniority of Superintendents in Zones under CBIC. Click here
  • Inviting Nominations for One Day Training Session on Infrastructure Development in CBIC & APAR Writing" for Group A Officers of CBIC on 7th May, 2018 at NACIN Faridabad. Click here
  • Inviting Nominations for Two Days' Training Session on "Free Trade Agreements , Possible Misuse & Redressal Mechanism" for Group A Officers of CBIC on 14th & 15th May 2018 at NACIN Faridabad Click here
  • Weekly newsletter from Chairman, CBEC dated 20/04/2018. Click here
  • Inviting Nominations for Two Days' Training Workshop on Preservation of Heritage Buildings for Group A Officers of CBIC on 21 and 22 May, 2018 Click here
  • CGST Rules, 2017 as amended upto 18.04.2018 have been uploaded. Click here
  • Details of Vendors providing E-seals as per Circular 36/2017-Customs & 37/2017-Customs Click here
  • Training on "Expenditure Management & Budget Planning" on 23.04.2018(Monday)by EMC, DGHRD at NACIN, Faridabad.Click here
  • Weekly newsletter from Chairman, CBEC dated 13/04/2018 Click here
  • "Circulars clarifying the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation; recovery of arrears under the existing law and reversal of inadmissible input tax credit issued; and clarification of issues in refund to UIN." Click here
  • " Seeking views/ suggestions and data for review of All Industry Rates (AIRs) of Duty Drawback for the year 2018- letter to Export Promotion Councils/ Commodity Boards/ Trade and Industry Associations/ Chambers of Commerce."Click here
  • Inviting Nominations for One day Training Session on “Expenditure Management” at NACIN Faridabad for the Officers of the rank of Joint/Addl Commissioners/Commissioners/Pr. Commissioners of CBIC on 23rd April, 2018. Click here
  • "Clarification on issues related to furnishing of Bond / LUT for exports has been issued." Click here
  • Two Days’ Training on Establishment and Administration" at NACIN Faridabad for the Officers of the rank of Asstt. Commissioner to Addl. Commissioners of CBIC on 19th & 20th April, 2018 .Click here
  • Ban on Import of Oxytocin; stepping up vigilance mechanism in check smuggling of Oxytocin - Click here
  • Smooth roll out of e-Way Bill system from 01st April, 2018 - Click here
  • FAQs on e-way bill Click here
  • Appointment of Nodal Officer for PQs in Customs Zones Click here
  • Appointment of Nodal Officer for PQs in CGST Zones Click here
  • TOP Most priority to PQ repliesClick here
  • Circular clarifying export related refund issues issued
  • Advisory on AIO functioning, connectivity issues for GST.-click here, TCS Escalatoin Matrix for GST Zones LAN Implementation, Wipro Handholders, HP Resident Engineers
View all

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