By TIOL News Service

MUMBAI, MAY 22, 2018: THE fact of the case is that appellant is engaged in the manufacture of cement. They sell the cement as ex-factory sale. After sale of the goods, finished goods are cleared from the railway by the C&F agent and the goods are handed over to the Transport for onward despatch to the buyer.

The buyer requests the appellant in writing to arrange logistic support such as loading and unloading of finished goods from the railway wagon, deployment of labour and arrangement of transportation on the buyer's behalf.

On receiving the written request from the buyer, the appellant instructs their authorized C&F agent to provide assistance as requested by the buyer thereafter C&F agent provides the service to the buyer. After rendering the services to the buyer, C&F agent raises Bills alongwith applicable service tax to the appellant for the service rendered to the buyer. Appellant raised debit note in favour of the buyer incorporating charges for logistic support to be provided by the C&F agent to the buyer. The appellant made the payment to C&F agent, such payment is accounted by them under the head of C&F charges recoverable.

The appellant availed Cenvat credit in respect of service tax paid by C&F agent.

The case of the department is that C&F agency services was not received by the appellant whereas same is rendered to the buyer directly, therefore, it is not input service for the appellant, hence credit is not admissible.

The appellant is before the CESTAT as the demand was confirmed by the lower authorities.

After considering the submissions, the Bench observed thus -

++ Even assuming time being appellant as recipient of service but since the service was provided on behalf of buyers and for which amount of C&F agency charges collected by the appellant from the buyer, service stands received by the buyer and not remained with the appellant.

++ It is also observed that appellant in their own books of account have not booked the said C&F charges as a expenditure but it was booked as C&F charges recoverable.

++ It is also fact that C&F charges was not includible in the value of the final product. In this undisputed fact, it is clear that C&F agency service provided by the C&F agency, it is for and on behalf of the buyer, therefore merely billing transaction routing through appellant will not make appellant as recipient of service.

The case laws cited by the appellant were distinguished on the ground that in all the cases the charges were borne by the assessees which stands absorbed in the value of final product/taxable services.

Concluding that there is no infirmity in the impugned order, the appeal was dismissed.

(See 2018-TIOL-1580-CESTAT-MUM)