Custom, Excise & Service Tax Tribunal
Marine Container Services (South) Pvt. ... vs Commissioner Of Central Excise & St , ... on 23 January, 2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No.ST/332/2009 & ST/333/2009 [Arising out of Order-in-Appeal No.67-68/2009 [ST] dt. 27.2.2009 passed by the Commissioner of Central Excise (Appeals), Madurai ] Marine Container Services (South) Pvt. Ltd. Appellant Versus Commissioner of Central Excise & ST , Tirunelveli Respondent
Appearance:
Shri C. Ramkumar, Consultant For the Appellant Shri R. Subramaniyan, AC (AR) For the Respondent CORAM :
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Date of hearing / decision : 23.01.2018 FINAL ORDER No. 40186-40187 / 2018 Per B. Ravichandran These two appeals are with reference to tax liability of the appellant on certain considerations received by them in the course of their activities as steamer agent. The appellants are acting as steamer agent for various shipping lines. They are registered with the department and paying service tax as steamer agents in terms of Section 65 (100) of the Finance Act, 1994. The dispute in the present appeals relates to certain amounts received from the clients which the appellant claim to be reimbursable expenses as well as demurrage charges on containers which is not related to any service.
2. We have heard both sides and perused the appeal records.
3. On the first issue regarding the tax liability on detained portion demurrage charges, we note that the only claim of the appellant is that such demurrage charges are the type of penalty on the consignee or consignor for not releasing the containers within the stipulated time. While we note that such penal charges cannot form part of taxable value for steamer agent, in the present case it is clearly recorded by the lower authority that the demurrage charges accruing to the liners is not subjected to tax. It is the amount which is retained by the appellant which cannot be considered as penal demurrage and is actually attributable to expenses in handling of containers and related activities which are more in the nature of ship husbandry work which is liable to be taxed. On perusal of the grounds of appeal and impugned order, we note that retained amount by the appellant in terms of arrangement between liners cannot be attributed to demurrage or penal charges and admittedly they are for making certain expenses which are part of work of appellant as a steamer agent. The method of receipt of consideration and the claim of such consideration will not alter that aspect.
4. Further on other expenses like telephone charges, survey charges, document charges, we note that the charges which are incurred on behalf of the client and reimbursed by the client on actual basis are not liable to be taxed. However, the details submitted by the appellant during the course of hearing only indicate the same lump sum payment reimbursed as logistic fee. Apparently, there is no reimbursement on actual basis and the exclusion under the category of 'reimbursement expenses' cannot be admitted for such lump sum payment. As already noted, the exclusion under the category of 'reimbursement expenses' are subject to the condition that such expenses would have been normally incurred by the client but incurred by the assessee-appellant and later reimbursed by the client on actual basis as per pre-arrangement known to both the parties. In the absence of such factual assertion in the present case, we are not able to interfere with the findings recorded on this count. The ld. counsel pleaded for setting aside penalties as they had bonafide belief regarding non-inclusion of these considerations in the tax liability. He referred to circular dt. 26.4.2010 of the Board regarding demurrage charges. We also note that the demands are made within normal period and the dispute involves interpretation of inclusion of certain considerations. Accordingly, while upholding the tax liability, we set aside the penalties imposed on the appellant for invoking provisions of Section 80 of the Finance Act, 1944. But for this modification, the appeals are dismissed.
(dictated and pronounced in court)
(B. Ravichandran) (Sulekha Beevi C.S)
Member (Technical) Member (Judicial)
gs
4
Appeal Nos.ST/332, 333/2009