Case Law Details
Commissioner of Service Tax Vs Export Inspection Agency (CESTAT Delhi)
CESTAT Delhi held that service provided by technical, inspection and certification agency in relation to inspection and certification of export goods is liable to service tax under ‘Technical, Inspection and Certification Service’.
Facts- The appellant is a body created u/s. 7 of Export (Quality Control and Inspection) Act, 1963 and works under the administrative and technical control of Export Inspection Council. The appellant is the field organisation of Export Council under Free Trade Agreement executed between India and foreign nation‘s products, eligible for Certificate of Origin required for preferential treatment in exporting country. This was subject to the said product being certified by certifying authority approved by both the countries. In pursuance to the said FTA, the appellant has been recognised as certificating authority for different food products.
The Department alleged that the service provided by the appellant were exigible to service tax. Two show cause notices were issued wherein service tax of Rs. 11,01,17,328/- was demanded. The first appeal has been filed by the Department for failure of imposition of appropriate penalty by the Commissioner. The assessee who is referred as appellant herein after has filed the appeal against the demand and penalties imposed in the impugned order.
Conclusion- The appellant is the certifying authority for different food products which are to be exported to other countries as per the Free Trade Agreements executed between India and other nations. The structure of the fees for testing is fixed by Central Government. However, as per section 10(3) of Export (Quality Control and Inspection) Act, 1963, the Council has its own fund which consist of income and receipts of the Council from other sources and all such money belonging to the fund of the Council is to be deposited in scheduled banks. From the above, we note that though the quantum of fee charged by the appellant is fixed by the Central Government, however the same is not deposited in the Government Treasury. Though the appellant‘s function is essential for inspection of export goods, but the usage of the term „may‟ in Section 3 of the Export (Quality Control and Inspection) Act, 1963, for the establishment of the Export Inspection Council, thus making it NOT a mandatory statutory duty activity of the Government. Consequently, it cannot be said that the appellant is discharging mandatory/statutory obligation.
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