The refund on “documentation charges” is allowable to exporters under C & F agency.

PJ/Case Laws/2012-13/1262

Case:- JOLLYBOARD LTD Vs COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, AURANGABAD

Citation: - 2012-TIOL-1264-CESTAT-MUMBAI

Brief fact: - The Appellant M/s. Jolly board Limited filed a refund claim of service tax of Rs. 2,45,720/- vide claim dated 18/07/2011. The claim was allowed for a sum of Rs. 2,23,547 and balance amount of Rs. 22,018/- was disallowed on the ground that the said service which is described as ‘documentation charges service' is not a taxable service as notified under Notification No. 17/2009 eligible for input service tax credit. The appellant preferred an appeal before the lower appellate authority who dismissed their appeal and upheld the order of the lower adjudicating authority. Hence the appellant is before Tribunal.

Appellant Contention: - The learned consultant appearing on behalf of the appellant makes the following submissions:-
1.    As per the invoices issued by the service provider, the item documentation charges is categorized under Clearing and Forwarding Agency Service and service tax liability has been discharged on the said charges under the said category. There is no dispute about the fact of payment of service tax on the documentation charges under Clearing and Forwarding Agency Service at the service provider’s end. Clearing and Forwarding Agency is an eligible input service under Notification 17/2009 at serial No. 15. Therefore, they are rightly entitled for the credit of the service tax paid thereon.
      2. They also relies on the judgment of the Hon’ble apex Court in the case of Sarvesh Refractories (P) Ltd. vs. Commissioner of Central Excise & Customs 2007 (218) ELT 488 (SC) = (2007-TIOL-233-SC-CX) and Commissioner of Central Excise & Customs vs. MDS Switchgear Ltd. 2008 (229) ELT 485 (SC) = (2008-TIOL-245-SC-CX) wherein the Hon’ble Apex Court held that quantum of duty/tax already determined by jurisdictional officers of the supplier unit cannot be contested or challenged by officers in charge of the recipient unit. The said decision was passed while considering the eligibility to credit under Rule 3 of the CENVAT Credit Rules, 2004. The ratio of the said judgment applies squarely to the facts of the present case and, therefore, the appellant is entitled for the refund.

Respondent Contention:-   The learned AR appearing for the Revenue supports the findings of the lower adjudicating and appellate authority and submits that documentation charges is not specified as an input service in the list of taxable service under Section 65 (105) of the Finance Act, 1994 and, therefore, the appellant is not eligible for the credit.

Reasoning of Judgment: The Tribunal held that there is no dispute about the fact of service tax liability having been discharged on the documentation charges under the category of Clearing and Forwarding Agency. Suppliers invoice submitted by the appellant clearly reveals this fact and a copy of the same is available in the records of the case. Therefore the officers in charge of the appellants factory (who is the recipient of the services) has no jurisdiction to deny the refund claim on the ground that the documentation charges are not covered under Clearing and Forwarding Agency Service.The ratio of the Hon'ble apex Court in the Sarvesh Refractories (P) Ltd. and MDS Switchgear Ltd., cited supra, clearly supports the appellant’s plea. Therefore, the denial of refund claim of the service tax paid on account of documentation charges to the appellant is not sustainable in law.

Decision:- Appeal allowedwith consequential relief.

Comments:-This landmark decision underlines that the refund on “documentation charges” is available. The service provider has paid the service under any head of service the refund is admissible. When the department has not challenged the same, now they cannot challenge the same at the recipient end. Hence the service tax refund is allowed.

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PJ/Case Laws/2012-13/1262

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