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2008 (10) TMI 131 - AT - Service TaxExecution of shipments of imports and exports by sea and air disputed period 2000-01 to 2003-04 demand on amount collected for transport of goods from warehouse, after clearance of same from custom, for import or export under head CHA s Service, is not justified brokerage commission for booking of export cargo not taxable under head BAS mere transportation charges not taxable under Cargo Handling Service - as the demand is not sustainable, the penalties and interest also not leviable
Issues Involved:
1. Demand under Custom House Agent (CHA) Services 2. Demand under Storage and Warehousing Services 3. Demand under Cargo Handling Services 4. Demand under Business Auxiliary Services 5. Imposition of Penalties Detailed Analysis: 1. Demand under Custom House Agent (CHA) Services: The Commissioner demanded Rs. 11,47,647 under CHA services for various charges like import console handling charge, CC Fees, and DO Fees. The appellants argued that these charges do not relate to the functions of a CHA as defined under section 65(105)(h) of the Finance Act, 1994. The Tribunal agreed, noting that these charges pertain to transportation and delivery of goods, not to the documentation and clearance activities typical of a CHA. The Tribunal relied on the CBEC Circular No. 43/1/97-TRU and previous Tribunal decisions, concluding that the demand under CHA services is unsustainable. 2. Demand under Storage and Warehousing Services: The Commissioner demanded Rs. 5,89,434 under Storage and Warehousing Services. The appellants contended that they were not liable for service tax prior to 16-8-2002 and had paid the tax post this date. The Tribunal agreed, stating that any tax demanded before 16-8-2002 cannot be sustained, as the appellants were not service providers under this category prior to this date. 3. Demand under Cargo Handling Services: A demand of Rs. 1,58,742 was made under Cargo Handling Services based on entries in the appellants' balance sheet. The appellants argued that the charges were related to transportation, not cargo handling. The Tribunal referred to the definition of 'Cargo Handling Services' under section 65(23) of the Finance Act, 1994, which excludes mere transportation. The Tribunal concluded that the appellants' activities did not fall under this category, making the demand unsustainable. 4. Demand under Business Auxiliary Services: The Commissioner confirmed a demand of Rs. 1,41,642 under Business Auxiliary Services for brokerage commissions. The appellants argued that these commissions were for booking export cargo and were exempt under Notification No. 13/2003. The Tribunal agreed, noting that the appellants acted as secondary service providers, which are not taxable as per the CBEC Circular dated 25-4-2003. Thus, the demand under Business Auxiliary Services was deemed unsustainable. 5. Imposition of Penalties: The Commissioner imposed penalties under sections 76, 77, and 78 of the Finance Act, 1944. Given that the demands were found unsustainable, the Tribunal ruled that penalties and interest could not be levied. Consequently, the appeal was allowed with consequential relief. Conclusion: The Tribunal found that the demands under CHA Services, Storage and Warehousing Services, Cargo Handling Services, and Business Auxiliary Services were unsustainable. Consequently, the penalties and interest imposed were also set aside, and the appeal was allowed with consequential relief.
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