COMMISSIONER OF C. EX. Vs. SURYA TRANSPORT COMPANY

JUDGEMENT

(1.) THE respondent are engaged in providing clearing and forwarding agent service, which attracts Service Tax. The period of dispute in this appeal is from 1 -10 -01 to 30 -9 -06. The respondent during this period were providing C&F agent's service to M/s. Prism Cement Limited (PCL), a manufacturer of cement. The C&F service was being provided by the respondent to PCL in terms of a contract between them. The respondent were being reimbursed the charges for demurrages and wharfage being charged by the railways and also the expenses for local transport on actual basis. The point of dispute is as to whether the demurrage/wharfage and expenses for local transport are includible in the assessable value of the service. During the period of dispute, the respondent were not including these expenses in the value on which Service Tax was being paid by them. The Jurisdictional Assistant Commissioner vide order -in -original dated 10 -6 -08, taking the view that these expenses have to be part of the assessable value, confirmed the Service Tax demand of Rs. 2,57,648/ - for the period from 1 -10 -01 to 30 -9 -06 along with interest and imposed penalties on them under Sections 76, 77 and 78 of the Finance Act, 1994. On appeal being filed to Commissioner (Appeals) against this order of the Assistant Commissioner, the Commissioner (Appeals) vide order -in -appeal dated 6 -11 -08 set aside the Assistant Commissioner's order holding that these expenses are being incurred by the respondent as pure agent and are not the expenses incurred in course of providing the service and accordingly the same would not be includible in the assessable value. In this regard, the Commissioner (Appeals) relied upon the Tribunal's judgment in the case of M/s. APCO Agencies v. C.C.E., Calicut reported in, 2008 (10) S.T.R. 169 (Tri. -Bang.) and also in the case of E.V. Mathai & Co. v. C.C.E., Cochin reported in : 2006 (3) S.T.R. 116 (Tri. -Bang.) : 2003 (157) E.L.T. 101 (Tribunal). In the former judgment, the Tribunal has held that the actual expenses incurred by the service provider on behalf of his clients and which are reimbursed to him would not be part of the assessable value and in the later judgment, the Tribunal held that the Service Tax on service of C&F Agents is leviable only on the remuneration for services provided as C&F agent and not on transportation charges. Against the above order of the Commissioner (Appeals), this appeal has been filed by the Revenue. Heard both the sides.

(2.) SHRI Davinder Singh, the learned Jt. C.D.R., assailed the impugned order by reiterating the grounds of appeal and emphasized that the Commissioner (Appeals) in his order has emphasized that the respondent has acted as pure agent while incurring expenses on wharfage/demurrage charged by the railway and on local transport, that this plea had not been made by the appellant before the original adjudicating authority and that in terms of Rule 6(8) of the Service Tax Rules, 1994 prior to its omission w.e.f. 19 -4 -06, the value of taxable service in relation to services provided by C&F agent to a client for rendering the services of C&F operations in any manner shall be deemed to be gross amount of remuneration or commission by whatever name called, paid to such agent by the client engaging such agent and that though the word 'remuneration' is not defined in the rules, this would cover all the expenses incurred by the C&F agent.

(3.) WE have considered the submissions from both the sides and perused the records. In terms of the respondent's contract with PCL, the respondent maintain godown at their principal's costs at various places for storage of cements and maintain proper records of receipt and dispatch of the cement. They are fully responsible for making arrangements for unloading/loading at railway stations/godowns and transportation thereof to various dealers/stockists, as per the directions of their principal. The wharfage/demurrage is charged by the railways on account of detention of the goods in the rakes or at railway premises beyond the permissible period. This amount charged by the railways is paid by the respondent and is reimbursed to them on actual basis. The Commissioner (Appeals) in the impugned order has given a finding that he has examined a few samples of the railway receipts regarding demurrage/wharfage charges and he finds that the said amount are shown to have been received from PCL and that in view of this, he finds that the appellant's submission that they had acted only as a pure agent is correct. As regards the local transport, the same is arranged by the respondent for sending the goods to the PCL's godowns on their behalf or sending the same to various parties on the instructions of PCL. As per the findings of the Commissioner (Appeals), the goods are loaded in the trucks/lorries mentioning PCL as the consignor and the appellant pay the freight only as an agent of PCL for which they are reimbursed. Here also, the respondent would have to be treated as pure agent of the PCL for payment of expenses for local transport. Thus, in respect of both, demurrage/wharfage charged by the railways and expenses on local transport, the respondent have acted only as agent of PCL and, as such, the expenses for these items reimbursed to them on actual basis by their principal - PCL would be not includible in the assessable value of the C&F agent services provided by them. We, therefore, do not find any infirmity in the impugned order. The Revenue's appeal is dismissed.