C&F Agent Service- valuation-Inclusion of reimbursement charges

PJ/Case Laws/2011-12/1325

Case: Amit Sales Corporation v/s Commissioner of Central Excise, Jaipur-I

Citation: 2009 (013) STR 0165 (Tri. - Del.)

Issue:- Valuation of Clearing & Forwarding agent service charges – Inclusion of reimbursement charges – decisions relied upon need re-consideration – stay granted.

Brief Facts:- Appellant was rendering services of 'clearing and forwarding agent'. The dispute involved is regarding the valuation of the services. Appellant was collecting the service charges under two heads, one Head known as 'Commission' and the other as "reimbursement of expenses" said to be on actual basis. It was claimed that the re-imbursement relates to expenses towards Godown rent, loading and unloading charges, the charge relating to cartage, stationery, printing telephone, electricity etc. The re-imbursement charges were not included in the value o service provided.

Appellant’s Contention:- Appellant relied upon the following decisions in support of their contetions:

- Sri Sastha Agencies Pvt. Ltd. Vs. Assistant Commissioner [2007 (6) S.T.R. 185 (Tribunal)]
- U.M. Thariath & Company vs. C.C.E., Cochin [2007 (8) S.T.R. 161 (Tri.-Bang.)]
- Sangamitra Services Agency vs. C.C.E. Chennai [2007 (8) S.T.R. 233 (Tri.- Chennai)]
- Jaylaxmi Enterprises vs. C.C.E., Mangalore [2008 (9) S.T.R. 19 (Tri.-Bang.)]
- Keralam Enterprises vs. C.C.E. & S.T, Cochin [2008 (9) S.T.R. 503 (Tri-Bang.)]
- APCO Agencies vs. C.C.& C.Ex., Calicut [2008 (10) S.T.R. 169 (Tri.-Bang.)]
- S & K Enterprises vs. C.C. & C.Ex., Calicut [2008 (10) S.T.R. 171 (Tri.-Bang.)]

Reasoning of Judgment:- The Tribunal found that the Appellant is primarily involved in rendering services as a 'clearing & forwarding agent' and the break-up given looks very artificial. It is not clear as to what all activities are treated by the appellant as falling within the service of "clearing and forwarding agent" and what exactly the amount under the Head 'Commission' stands for.

On perusal of the decisions cited by the Appellant, the Tribunal did not find the reasoning for arriving at the decision to exclude the amounts collected as reimbursement of various expenses. The list of excluded category got enlarged in the later decisions following the decision given in Sri Sastha Agencies Pvt. Ltd. and has permitted not only charge reimbursed under specific head but under residuary heads by use of words such as "like" and "etc." To render any service, manpower, equipments and other facilities are required in varying proportions. No service can be rendered in a vaccum. The value for the services should be the gross amount charged and should be determined strictly as per Section 67 of the Finance Act, read with the Rules. The Tribunal was, prima facie, of the view that the decisions rendered require re-consideration.

Inasmuch as the appellant is relying on the precedent decisions of the Tribunal and claiming waiver of pre-deposit both on merits and on the ground that demand is hit by time-bar aspect.

Decision:- Stay granted.

Comment:- The reimbursement of expenses are includible if they are incurred during the providing of service but if it is incurred as pure agent then it is not includible. This view has been taken up the tribunal. Although this is stay matter only and final decision has to come but the analogy is already laid down by the tribunal.

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PJ/Case Laws/2011-12/1325

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