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TMI Blog2021 (7) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... rding wherein it undertakes various activities in relation to transportation of goods in the course of import/export by sea and air. Appellant is also authorized to act as Customs House Agent under Customs House Licensing Regulations 2004 and has been granted license of Customs House Agent. Appellant has entered into contracts with M/s. Vodafone Essar group of companies for supply of Freight Forwarding Services dated 28/08/2009 for Kerala Circle, the appellant also acts as CHA in terms of the work order entrusted by the Vodafone entities which were subsequently converted into an item rate contract for provision of Customs House Agent Services. In terms of the work order/item rate contract, the appellant provided CHA Services for import and export of goods wherein the scope of the work inter alia consists of the following: a) To process the customs clearance documents with Customs and Central Excise b) To arrange to pay the customs duty and warehousing charges c) To arrange Customs inspection/examination and co-ordinate the delivery The appellant has also entered into an agreement dated 01/04/2010 with M/s. BPL Limited for integrated logistics service which includes freight f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the factual and legal position regarding the services rendered by the appellant. He further submitted that the impugned order is contrary to the binding judicial precedent decided by the Tribunal and the High Court. The learned counsel further submitted that in fact the activities of the appellant was not classifiable under CHA Services upto 01/07/2012. He further submitted that freight forwarding is not an activity that a licensed CHA is required to undertake to render the services of CHA. The activity of freight forwarding is undertaken by CHA, if at all, in addition to his business of being CHA and not in the course of such business. The learned counsel also took us through the definition of CHA as prescribed in Section 65(35) of the Finance Act, 1994. Custom House Agent is a person licensed temporarily or otherwise under the regulations made under sub-section (2) of Section 146 of the Customs Act, 1962. Taxable service of CHA is defined in sub clause (h) of Section 65(105) as services provided or to be provided 'to any person, by a custom house agent in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices provided or to be provided' shall be included in consideration. Therefore, where any amount received is not related to the services provided, such consideration cannot be included in Section 67. Such an attempt would be ultra vires Section 66 being the charging section and Section 67 being the valuation section. 3.3. The appellants further submit that in the present case, the freight amount is not charged for providing CHA Service. Freight forwarding charges are recovered independent of the CHA Service provided by the appellants to their customers. 3.4. Freight on import goods is subject to Customs duty in the first place and is considered as value of goods It is submitted by the appellant that in terms of Section 14 of the Customs Act, 1962 read with Rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 the transaction value in the case of imported goods has to inter alia include cost of transportation to the place of importation, insurance etc. It is a settled law that where an amount is considered as part of the value of goods, the same amount cannot be subjected to service tax. In this regard, reliance is placed on Notification No. 9/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For this, the learned counsel relied upon the following decisions wherein it has been consistently held that profits made on an activity which is not a part of the taxable event cannot be subject to tax. a) Greenwich Meridian Logistics (India) Pvt. Ltd. V. CST, Mumbai -2016-TIOL-869-CESTAT-MUM. b) Interfreight Services Pvt. Ltd. V. CST, Chennai - 2018-TIOL 1565-CESTAT-Mad. c) M/s. PVGT Freight Forwarders and Logistics Pvt. Ltd. V. CST, Chennai II Commissionerate - 2018-TIOL-3311-CESTAT-MAD. d) M/s. LA Freight Pvt. Ltd. V. Commissioner of Service Tax, Chennai - 2018 (3) TMI 113-CESTAT CHENNAI e) Seamax Logistics Ltd. V. CCE & ST, Tirunelveli - 2018 (7) TMI 262 CESTAT CHENNAI f) K. Steamship Agencies Pvt. Ltd. V. CCE, Chennai-II Commissionerate - 2019-1-TMI-440-CESTAT CHENNAI 3.6. Learned counsel also questioned the invocation of extended period and submitted that the Department was fully aware of the activities carried out by the appellant and appellants have submitted all the financial statements, agreements with customers and overseas freight forwarders which were verified by the audit. He further submitted that the appellant had a bona fide belief that they are not l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsed under these regulations to act as agent for the transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station." Further the taxable service of CHA is defined in sub-clause (h) of Section 65(105), which is reproduced herein below: "(105) (h) to a client, by a custom house agent in relation to the entry or departure of conveyance or the import or export of goods." Perusal of the definition of 'CHA' as provided in the Finance Act as well as in Regulation, we find that the scope of CHA service is restricted only to the licensed activities relating to either (a) entry or departure of conveyances at any Customs Station or (b) import or export of goods at any Customs Station. Further, we find from the definition of 'CHA' Services that freight forwarding is an activity outside the scope of a CHA's business, and freight forwarding is undertaken to get the goods transported from/to international boundaries to/from the Indian ports and the said activity is not in any way related to CHA's business and CHA is not required to execute these services in the course of CHA's business. We also find that this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is a settled law that where an amount is considered as part of the value of goods, the same amount cannot be subjected to service tax as held by the Tribunal in the case of United Shippers and affirmed by the Hon'ble Apex Court cited supra. We also find that ocean freight has been kept outside the service tax and the decisions relied upon by the appellant in this regard clearly hold that ocean freight is not an activity which should besubjected to service tax. We also find that even after the introduction of Negative List, freight and freight forwarding is not taxable and when a particular activity is not taxable then the margin earned in relation to such activity cannot be subjected to tax as held by the Apex Court in the case of Baroda Electric Meters Ltd. V. Collector of Central Excise reported in 1997 (94) E.L.T. 13 (S.C) and consistently followed by the Tribunal in various decisions cited supra. We also find force in the submissions of the learned counsel for the appellant that in case of export freight, no service tax is payable because the said service is non-taxable service and is provided in a non-taxable territory. We also find that with regard to export freight, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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