Custom, Excise & Service Tax Tribunal
Gac Shipping India Pvt Ltd vs Madurai on 12 July, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Service Tax Appeal No.42398 of 2014
(Arising out of Order-in-Appeal No. 80/2014 dated 7.8.2014 passed by the
Commissioner of Central Excise (Appeals), Madurai)
M/s. GAC Shipping (India) Pvt. Ltd. Appellant
No. 4/143, CGE Colony
Tiruchendur Road
Levinjipuram, New Colony
Tuticorin - 628 003.
Vs.
Commissioner of GST & Central Excise Respondent
Central Revenue Building Lal Bahadur Shastri Marg Madurai - 625 002.
APPEARANCE:
None for the Appellant (Written Submissions) Shri N. Satyanarayanan, AC (AR) for the Respondent CORAM Hon'ble Shri P. Dinesha, Member (Judicial) Hon'ble Shri M. Ajit Kumar, Member (Technical) Final Order No.40854/2024 Date of Hearing : 18.03.2024 Date of Decision: 12.07.2024 Per M. Ajit Kumar, This appeal is filed against Order in Appeal No. 80/2014 dated 7.8.2014 passed by the Commissioner of GST & Central Excise (Appeals), Madurai.
2. Brief facts of the case are that the appellants are registered with the Service Tax Department under the category of 'Custom House Agents', 'Transport of Goods by Road' and 'Business Auxiliary Service'. During the scrutiny of accounts by the officers of Central Excise, it was found that the appellant had collected amount in excess in the guise of 2 ST/42398/2014 ocean freight charges from various clients for the period from 01/2012 to 09/2012 for import/export of cargo and not paid service tax for the same under Steamer Agent Service. Hence Show Cause Notice dated 25.2.2013 was issued proposing to demand the service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand of Rs.8,623/- along with interest and imposed penalties under sections 76 and 77 of the Finance Act, 1994. In appeal, Commissioner (Appeals) upheld the same. Hence the appellant is before this Tribunal.
3. None appeared for the appellant. However, the learned counsel Shri A.J. Markos has filed a written submission on behalf of the appellant and prayed that the appeal may be disposed of on merits. Shri N. Satyanarayanan, learned Assistant Commissioner appeared for the respondent.
3.1 The appellant in his written submission submits that the period of dispute is from January 2012 to September 2012 involving an amount of Rs.8,623/-. The issue involved is with respect to service tax liability on the mark-up/ profit made on ocean freight, i.e., the difference of actual ocean freight charges paid to the shipping line and the freight charges collected from the customer of the Appellant. They have submitted that this Tribunal in a recent decision in the case of A.G.X Logistics Pvt. Ltd., had vide Final Order Nos.41104- 41106/2023 dated 12.12.2023 on the very same issue held that ocean freight or the mark-up on the same received by the Appellant cannot be subject to levy of service tax and set aside the impugned Orders. They have further stated that on the very same issue in the Appellant's 3 ST/42398/2014 own case for the previous periods, three earlier SCNs were issued to the Appellant which led to Appeals before the same appellate authority the Commissioner (Appeals), Madurai who had vide two separate Orders-in-Appeal dated 16.07.2012 and 24.02.2014 allowed the Appeals and dropped the demands. Despite the same, the impugned Order has been issued, inconsistent with the stand taken for the previous periods. They have relied upon the CESTAT, Ahmedabad judgment in the case of Gudwin Logistics, (2010) 18 STR 348 (Tri.- Ahmd) which held that Ocean Freight is not liable to service tax. They also referred to the Hon'ble Supreme Court's judgment in the case of Baroda Electric Meters, 1997 (94) ELT 13 (SC) which had also held that when ocean freight actually paid is less than the amount collected, the differential amount cannot be included in the assessable value as the same is profit. They hence prayed that the appeal may be considered on merits in their absence and the impugned order quashed.
3.2 Shri N. Satyanarayanan, learned Assistant Commissioner supported the findings in the impugned order. He prayed that the impugned order may be upheld and the appeal rejected.
4. We have heard the rival submissions. We find that the issue pertains to the appellant having added some markup value/ margin on the ocean freight charges and collected the same from their clients. Revenue is of the opinion that the mark up value in ocean freight is liable for service tax under Steamer Agent Service. 4
ST/42398/2014
5. We find that the issue is no longer res integra. The Hon'ble Supreme Court in the case of Baroda Electric Meters Ltd. v. Collector [1997 (94) E.L.T. 13 (S.C.)] held as under;
The Tribunal accepted the position that equalised freight was charged by the appellant from everyone, but proceeded to say that even though freight cannot be a part of the assessable value that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In our opinion, the Tribunal proceeded on an incorrect premise. It was clearly held in Indian Oxygen Ltd. v. Collector of Central Excise - 1988 (36) E.L.T. 723 (S.C.) = 1988 (Supp.) SCC 658, that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of that decision, the view taken by the Tribunal cannot be sustained.
The above judgment of the Hon'ble Supreme Court and the judgments cited by the appellant above, including those in their own case makes it clear that the profit made by the appellant by markup of transport charges which has nothing to do with the activity of Steamer Agent Service would not be liable to Service Tax by adding it to the value of the said taxable service.
6. The impugned order is hence set aside, and appeal is allowed. The appellant is eligible for consequential relief, if any, as per law. The appeal is disposed of accordingly.
(Pronounced in open court on 12.07.2024)
(M. AJIT KUMAR) (P. DINESHA)
Member (Technical) Member (Judicial)
Rex