2015 (5) TMI 1064 - AT - Service Tax

Valuation C & F agent service - transportation charges is reimbursement charges includible in the assessable value for charging service tax? Held that - the issues taken up and already decided in the case J.N. Traders Vs. CCE 2007 (3) TMI 34 CESTAT, CHENNAI , where it was held that re-imbursement of expenses on actual basis towards freight is not liable to be included in the value of taxable C&F agent service. Power of Commissioner (appeals) to remand the case - amendment to Section 35A of the Central Excise Act, 1944 with effect from 11.5.2001 - Held that - this has been held in the case CCE, Jalandhar Vs. B.C. Kataria 2007 (9) TMI 167 - HIGH COURT OF PUNJAB & HARYANA that once power of remand has been expressly taken way by the Finance Act, 2001, which came into operation with effect from 11.5.2001, the Commissioner (Appeals) is divested of power to remand the case back to the adjudicating authority. Matter remanded to the Commissioner (Appeals) with direction that the required verification in terms of paras 9 & 10 of the impugned order-in-appeal shall be conducted at his end and appropriate orders passed appeal disposed off decided against Revenue.

Summary

Issues:
1. Inclusion of transportation charges reimbursed by M/s Grasim Industries in the assessable value of C&F agent service.
2. Power of remand with the Commissioner (Appeals) post-amendment to Section 35A of the Central Excise Act, 1944.

Analysis:

Issue 1:
The Revenue appealed against the order-in-appeal that excluded the transportation charges reimbursed by M/s Grasim Industries to its C&F agent from the assessable value of the C&F agent service. The Revenue argued that the amount shown in the balance sheet of the respondent represented the value of service received, and thus, service tax was rightly demanded on the suppressed amount. However, the Commissioner (Appeals) held that the reimbursement of transportation charges was not includible in the assessable value as M/s Grasim Industries had already paid service tax on Goods Transport Agency (GTA) service. The Tribunal found that the agreement between Grasim Industries and the respondent clearly stated that the freight paid by the respondent was reimbursable, and previous judgments supported that such reimbursements were not taxable in the value of C&F agent services. Therefore, the Tribunal upheld the order-in-appeal's decision regarding the non-inclusion of transportation charges in the assessable value.

Issue 2:
The Revenue contended that the Commissioner (Appeals) had no power to remand the case post-amendment to Section 35A of the Central Excise Act, 1944. The Tribunal agreed with the Revenue, citing judicial pronouncements that after the amendment, the Commissioner (Appeals) was divested of the power to remand cases. Referring to cases like CC, Amritsar Vs. Enkay (India) Rubber Co. Pvt. Ltd. and CCE, Jalandhar Vs. B.C. Kataria, the Tribunal established that the Commissioner (Appeals) was not authorized to refer the matter back to the original adjudicating authority for verification. Consequently, the Tribunal remanded the case to the Commissioner (Appeals) for conducting the required verification as per the impugned order-in-appeal, while affirming the decision on the transportation charges' non-inclusion in the assessable value.

In conclusion, the Tribunal ruled in favor of the respondent, holding that transportation charges reimbursed by M/s Grasim Industries were not to be included in the assessable value of the C&F agent service. However, the case was remanded to the Commissioner (Appeals) for verification, and the power of remand post-amendment to Section 35A was clarified.