S.L. Peeran, Member (J)

1. Both these appeals arise from Order-in-Appeal No. 224/2006 CE dated 19.7.2006. The revenue is aggrieved with the portion of the order granting the benefit of time bar and for having remanded the matter on a portion of the demands for grant of the benefit of time bar. The assessee is aggrieved with the denial of the benefit of deduction of wharfage charges paid to the port authorities and collected as part of lump-sum payment from their clients.

2. The assessee-appellant claim that the wharfage charges, which is a statutory port dues was eligible for deductions from value of Custom House Agent services for calculating its taxable value. The Commissioner (A) in the impugned order although has upheld the issue as legally correct and also has noted that port authorities must be paying service charges on such wharfage charges collected under the category of Port Services, however, he has not granted the benefit of deduction of wharfage charges on the ground that as per Board Circular F. No. B/43/1/97 TRU dated 6.6.1997 the appellants are allowed to treat 15% of such lump-sum receipts as value of taxable services and pay service tax on this 15% only. He has noted that such a mode of valuation is adopted, it is not possible or permissible to deduct individual expenses like wharfage charges from the gross receipt and treat the residual as lump-sum payment. He has further noted that in the event such deductions are claimed and allowed, the residual payment cannot be treated as lump-sum payment and Service Tax liability will have to be discharged on total receipt minus deductions and not on 15% of total receipts minus deductions. On time bar also, he has noted that the appellant-assessee were regularly furnishing ST-3 returns, which was assessed and finalized by the department. He has noted that the department had an opportunity to examine the invoices and other records, therefore, the larger period cannot be invoked. At the same time, he has noted that once self assessment procedure was adopted the liability of calculating and discharging duty is of the assessee alone and no knowledge of the part of the department can be presumed. For this period, the charge of concealment resulting in short payment of duty becomes sustainable. The Revenue is aggrieved with portion of the order wherein the Commissioner (A) has noted that the larger period cannot be invoked for extended period claiming concealment with malafide intention.

3. The appellants plea on merit is that the wharfage charges are clearly deductible in terms of the Boards Circular itself and the Commissioner (A) cannot take specious argument to somehow confirm the demands by denying the benefit of deduction on wharfage charges. The learned Counsel submits that wharfage charges are collected by the port authorities as a statutory levy and it is deductible in terms of CBEC Circular F. No. B/43/1/97-TRU dated 6.6.1997. A copy of the said circular has been filed. The learned Counsel relying on the said circular, which clearly clarifies in Para 2.4 and 2.5 is as follows.

2.4 It is clarified that in relation to Custom House Agent, the service tax is to be computed only on the gross service charges, by whatever head/nomenclature, billed by the Custom House Agent to the client. It is informed that the practice is to show the charges for services as "agency commission", "charges", "agency and attendance charges", "agency charges" and some similar descriptions. The service tax will be computed only with reference to such charges. In other words, payments made by CHA on behalf of the client, such as statutory levies (cess, customs duties, port dues, etc.) and various other reimbursable expenses incurred are not to be included for computing the service tax.

2.5 In many cases, the Custom House Agent undertakes "turnkey" imports and exports where a lump sum amount is charged from the client for undertaking various services. In these cases, the lump sum amount covers not only the "agency commission" fee but also other expenses and no separate break-up is given in respect of these expenses. It has been decided that in such cases, the value of the taxable service shall be 15% of the lump sum amount charged to the client. The Custom House Agents are required to show the service charges as 15% of such lump sum amount of the bills and Service Tax of 5% will be chargeable on the above 15%.

3.1 The learned Counsel submitted that once the ST-3 returns have been finalized, it follows that department is in full knowledge of the facts and Commissioner (A) cannot take a view that for the part of the amount, larger period is sustainable. In this regard, he also relied on large number of judgments.

4. The learned SDR defended the order and submitted that the finding given by the Commissioner (A) is based on Para 2.5 of the said CBEC Circular which is also noted above. She also pleaded for upholding the departments plea for invoking larger period.

5. We have carefully considered the submissions. We notice from Para 2.4 of the Board Circular that Service Tax will be computed only with reference to such charges as mentioned in Para 2.4. It has been clarified that "in other words, payment made by CHA on behalf of the client, such as statutory levies (cess, customs duties, port dues, etc.) and various other reimbursable expenses incurred are not to be included for computing the Service Tax". The Circular being very clear and explicit in Para 2.4, there was no scope for applying the provisions of Para 2.5 in the present case. Para 2.5 is not applicable to the present case at all. Para 2.5 deals only with regard to "Customs House Agent undertaking turnkey imports and exports where a lump-sum amount is charged from a client for undertaking various services". Even in terms of Para 2.5 deductible expenses are not to be charged for duty in terms of Para 2.4. There is no contradiction in these two paragraphs. Para 2.4 speaks about the deductions which are eligible to the Custom House Agent. Therefore, the order passed by the Commissioner (A) holding that wharfage charges are not eligible for deductions, is not acceptable and not correct in law. Furthermore, the Commissioner (A) having given a finding that ST-3 returns were assessed and finalized and therefore, there is no malafide intention to suppress facts and at the same time holding a portion of the tax is saved, is not correct. On both points, the assessee succeeds. The impugned order is set aside in toto. Hence, the assessees appeal is allowed. There is no merit in the revenue appeal and the same is dismissed.

(Operative portion of this Order was pronounced in open court on conclusion of hearing)