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2015 (11) TMI 906 - CESTAT BANGALORE

2015 (11) TMI 906 - CESTAT BANGALORE - 2016 (45) S.T.R. 460 (Tri. - Bang.) - Valuation - CHA service or C & F Agent service - inclusion of reimbursement of expenses - Held that:- in Circular No.119/13/2009-ST dated 21.12.2009, CBEC had clarified the position. In fact the Trade Note is based on the circulars. In paragraph 3 of the said Circular, it was observed and reported that Board had clarified on 6.6.1997 that service tax would be charged on the service charges only and statutory levy and ot .....

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e squarely applicable to the facts of this case. Appellant has taken registration as a CHA has been discharging service tax liability on that basis and the activities undertaken by the appellant are the ones which have been taken note of by the CBEC. - Even in the case of clearing and forwarding agent also, the Tribunal had taken a view that reimbursement on account of loading and unloading, packing/unpacking, freight, etc., cannot be included (Apco Agencies vs. Commissioner, Calicut as repo .....

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reclassification as C & F agent service cannot be sustained - Decided in favour of assessee. - ST/326/2007-DB - Final Order No. 21255 / 2015 - Dated:- 26-5-2015 - Shri G. Raghuram, President And Shri B.S.V.Murthy, Technical Member For the Petitioner : Mr. Hari Radhakrishna, Advocate For the Respondent: Mr. R. Gurunathan, Addl. Commissioner (AR) ORDER Per : B.S.V.MURTHY International Shippers and Traders Ltd., Kakinada is a licensed Custom House Agent (CHA). The services rendered by a CHA became .....

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ding services, steamer agent service, port service and cargo handling service but had taken out registration only for CHA services. On the basis of income in balance sheet, the service tax liability was calculated and notice was issued. After the adjudication process, it has been held that the services provided by the appellant is to be classified as clearing and forwarding services in view of the fact that as per provisions of Section 65A(b) of Finance Act, 1994 when composite service is provid .....

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he vessel; transporting the cargo to the shore by using barges; unloading the cargo at the wharf; clearing the goods and transporting it to the godown and unloading at the godown; and transporting the cargo from the godown after bagging either by truck or by railway wagon. He drew our attention to the Circular issued by the Board wherein it was held that CHA renders several services and it is not limited to clearing of import and export consignments alone. Further, he also submits that the class .....

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agent. The CHA offers services to clear the imported goods from the customs station whereas C & F Agent offers services to clear the goods from the manufacturers/traders premises. He also submits that he relies on the decision in the case of Intercontinental Consultants & Technocrafts Pvt. Ltd. Vs. UOI [2013(29) STR 9 (Del.)] to submit that reimbursable expenses cannot be included for arriving at the value of the service. He also relies upon several other decisions to submit that the se .....

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correct and appellant is liable to pay tax and liable to penalties. 4. We have considered the submissions and gone through the records. During the relevant period, the CHA service was defined as service to any person by a CHA in relation to the import or export of goods. 4.1 As per Section 65(25) of Finance Act, 1994 : Clearing and Forwarding Agent is defined as any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operatio .....

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signment. The CHA also renders the service of loading/ unloading of import or export goods from /at the premises of the exporter / importer, the packing, weighment, measurement of the export goods, the transportation of the export goods to the customs station or the import goods from the customs station to the importers premises, carrying out of various statutory and other formalities such as payment of expenses on account of octroi, destuffing/pelletisation, terminal handling, fumigation, draw .....

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he exporter / importer. For all the above charges, the CHA is ordinarily reimbursed by the importer / exporter for whom the above services are rendered. Apart from the above charges, the CHA also charges the client for his service under the head / nomenclature of agency and attendance charges or similar kind of heads which is purported to be his service charge in respect of the services rendered in relation to the import / export goods. 2.4 It is clarified that in relation to Custom House Agent, .....

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half of the client, such as statutory levies (cess, Customs duties, port dues, etc.) and various other reimbursable expenses incurred are not to be included for computing the service tax. 2.5 In many cases, the Customs House Agent undertakes "turnkey" imports and exports where a lump sum amount is charged from the client for undertaking various services. In these cases, the lump sum amount covers not only the "agency commission" fee but also other expenses and no separate bre .....

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he position. In fact the Trade Note is based on the circulars. In paragraph 3 of the said Circular, it was observed and reported that Board had clarified on 6.6.1997 that service tax would be charged on the service charges only and statutory levy and other reimbursable charges would not be included in the taxable value. The Board also observed that in case where there is lump sum payment towards reimbursible as well as service charges, service tax would be charged on 15% of the gross value onl .....

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CBEC. 4.3 At this stage, it would be appropriate to mention that two contracts entered by the appellants on a sample basis have been produced before us. In the case of contract with The Andhra Sugars Ltd., the appellant was to undertake all the activities discussed hereinabove and were entitled to a rate of ₹ 220 per metric tonne including agency commission of ₹ 10 per metric tonne. Similarly in the case of agreement with Indian Potash Ltd., agency commission was specifically mention .....

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rate agreement and not part of the agreement on the basis of which the activities within the port were undertaken. The only ground the Commissioner has refused to exclude the reimbursable expenditure is that it got merged in the consolidated pre-agreed rate as per the agreement. We find that the Board circular issued and referred to above clearly covered the case of the appellant. 4.4 Moreover, the liability of CHA to service tax was considered by the Tribunal. In the case of S & K Enterpris .....

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