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TMI Blog2016 (10) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue is duty bound to examine the issue and disposed of the claim of waiver failing which the Revenue cannot continue to demand of cost recovery charges from the appellant. Appeal allowed - decided in favor of appellant. - C/56088//2013-Cus(DB) - Final Order No. 61148/2016 - Dated:- 18-7-2016 - Mr. Ashok Jindal Member (Judicial) and Mr. V. Padmanabhan, Member (Technical) Shri Naveen Bindal, Advocate- for the appellant Shri Satyapal, A.R.- for the respondent ORDER The appellant is in appeal against impugned order demanding cost of recovery charges post March, 2010. 2. The facts of the case are that the appellant is notified CFS on 6.12.2007 and started its operation with the effect from 1.3.2008. As per CBEC instruction dated 14.12.95 read with circular No.52/97Cus dated 17.10.97 a CFS is required to deposit in advance cost recovery charges i.e. charges of the custom official posted at port. Advance deposit may be made for three months. The appellant paid cost recovery charges till Feb., 2010, Thereafter, the appellant did not pay any cost recovery charges till September, 2010. On 6.9.2010, the cost recovery charges amounting to ₹ 36 lakh wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Larsen Toubro Ltd.2015 (39) STR 913 (SC) and Suresh Kumar Bansal-2016-TIOL-HC-DEL. He further submitted that as per instruction issued by CBEC dated 12.09.2005 if the CFS achieved the bench mark performance during the previous two years, it is entitled to waiver of charges. He submitted that admittedly the appellant has achieved bench mark performance within 2 years and there is no lapse on the part of the appellant but it is on the part of the Revenue. In fact the Revenue for the first time in September, 2010 raised the demand of ₹ 36 lakh and the appellant instantly paid the same, thereafter the appellant claimed the waiver and the Revenue by one after another letter increased the demand. At no point of time, the respondent was sure about charges so amount was changed from time to time. There is no provision which requires determination of charges at the end of the appellant, Therefore, the respondent cannot claim when there is lapse on the part of the appellant. In the circumstances, it is prayed that the impugned order is to be set aside. 4. Learned AR opposed the contention of the learned Counsel and submitted that the appellant was entitled for exemption fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shall bear the cost of the customs officer posted by the principal Commissioner of Customs or Commissioner of Customs, as the case may be on cost recovery basis and shall make payments at such rates and in the manner specified by the Government of India in the Ministry of Finance unless specifically exempted by an order of the said Ministry 8. On perusal of the said provision, we find that the CFS is required to pay the cost recovery charges at rate and manner specified by the Ministry. As, no manner or rate has been prescribed under the regulation or any other way subsequent to the regulation, in that circumstance, we are of the view that cost recovery charges cannot be demanded from the appellant. The same view has been taken by the Apex Court in the case of Larsen Toubro Ltd (supra): 25. In fact, by way of contrast, Section 67 post amendment (by the Finance Act, 2006) for the first time prescribes, in cases like the present, where the provision of service is for a consideration which is not ascertainable, to be the amount as may be determined in the prescribed manner. 26 . We have already seen that Rule 2(A) framed pursuant to this power has followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Delhi High Court judgment unfortunately misread the aforesaid judgment of this Court to arrive at the conclusion that it was an authority for the proposition that a tax is leviable even if no rules are framed for assessment of such tax, which is wholly incorrect. The extracted passage from Mahim Patram s case only referred to rules not being framed under the Central Act and not to rules not being framed at all. The conclusion therefore in paragraph 36(2) of the Delhi High Court judgment is wholly incorrect. Para 36(2) reads as follows :- (2) Service tax can be levied on the service component of any contract involving service with sale of goods etc. Computation of service component is a matter of detail and not a matter relating to validity of imposition of service tax. It is procedural and a matter of calculation. Merely because no rules are framed for computation, it does not follow that no tax is leviable. [at para 36] 36. In a recent judgment by one of us, namely, Shabina Abraham Ors. v. Collector of Central Excise Customs, judgment dated 29th July, 2015, in Civil Appeal No. 5802 of 2005 = 2015 (322) E.L.T. 372 (S.C.), this Court held :- It is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at prior the enactment of the Finance Act, 2007 - by virtue of which Section 65(105)(zzzza) of the Act was introduced and Section 67 of the Act was amended - a composite contract was not taxable. This was so because in absence of Rule 2A of the Rules there was no machinery for excluding the non-service element from such composite works contracts involving an element of services and transfer of property in goods. Whilst the impugned explanation expands the scope of Section 65(105)(zzzh) of the Act, it does not provide any machinery for excluding the non-service components from the taxable services covered therein. The Rules also do not contain any provisions relating to determination of the value of services involved in the service covered under Section 65(105)(zzzh) of the Act. Thus the said clause cannot cover composite contracts such as the one entered into by the petitioners with the builder. 50. In Maharashtra Chamber of Housing Industry (supra), the Bombay High Court upheld the constitutional validity of the impugned explanation by examining the object of the taxation. The Court held that the legislative competence must be determined with reference to the object of the le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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