2011 (9) TMI 402 - AT - Service Tax

Customs House Agent(CHA) services - respondents have collected amounts under a heading Service Charges-Compliance - Revenue contended that activities of assesse come under CHA services as defined in Section 65 (105)(h)of Finance Act, 1994 and hence taxable - while assesse said that activities do not relate to the core activities of the CHA - Held and decided that respondents have collected the amounts under the heading Service Charges-Compliance and have not indicated the actual nature of work undertaken - the work of the CHA relating to the processing of draw back claim in respect of any export consignments starts even before the shipping bill for draw back claim is filed by the choice of entry of Drawback schedule underwhich drawback is claimed - the impugned activities will also fall under CHA services. - Matter remanded back to decide other issues i.e penalty on the ground of bonafide mistake.

Summary

Issues:
Department appealing against Commissioner (Appeals) order on Service Tax liability for charges collected by the respondent under 'Service Charges-Compliance' from 100% EOUs and units in STP during 2002-03 and 2003-04.

Analysis:
The appeal involved the question of whether the charges collected by the respondent constituted taxable services falling under the category of 'Customs House Agent' (CHA) services. The department argued that the charges were received for liaisoning with the Customs department for duty drawback collection, which directly related to export activities and thus were taxable. The department relied on the scope of services rendered by CHAs as defined in the Finance Act, 1994 and a relevant Trade Notice.

The respondent contended that the charges collected were not related to core CHA activities as they were for processing duty drawback claims after the export of goods. The respondent argued that the services provided were not part of the core activities of a CHA as defined in Section 65 (105) of the Finance Act, 1994. The respondent also pointed out that the Finance Act did not rely on the CHA Licensing Regulations (CHALR) to define the scope of CHA services.

Upon considering the submissions from both sides and examining the records, the Tribunal found that the charges collected by the respondent under 'Service Charges-Compliance' were indeed for services related to CHA activities. The Tribunal noted that the CHA's role included filing shipping bills for exports, advising exporters on drawback claim entry, and determining drawback eligibility before goods were exported. The Tribunal disagreed with the Commissioner (Appeals) who had held that the respondent's activities did not fit within the scope of CHA services related to exporting goods.

Additionally, the Tribunal addressed the issue raised by the respondent regarding penalty imposition, citing a Tribunal decision in a similar case. The Tribunal set aside the Commissioner (Appeals) findings on the merits of the case and held that the impugned activities fell under CHA services. However, the Tribunal remanded the matter to the Commissioner (Appeals) for fresh consideration on other issues raised by the respondent in their 'Appeal Memorandum.'

In conclusion, the Tribunal disposed of the appeal by setting aside the Commissioner (Appeals) findings on the merits, affirming that the charges collected were for CHA services related to exporting goods. The Tribunal directed a fresh consideration of other issues raised by the respondent, emphasizing the taxable nature of the services provided by the respondent.