CUSTOM HOUSE AGENT
Date of Introduction: 15.06.1997 vide Notification No.17/97ST dt.06.06.1997.
Definition:
“Custom House Agent” means a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act, 1962.
(Section 65(22) of Finance Act, 1994 as amended)
A person is permitted to operate as a customs house agent, temporarily under regulation 8(1) and permanently under regulation 10, of the Customs House Agents Licensing Regulations, 1984.
Taxable events & Scope of service:
Taxable service means any provided to a client, by a Custom House Agent in relation to the entry or departure of conveyances or the import or export of goods.
(Section 65(72) (h) of Finance Act, 1994 as amended)
The services rendered by the custom house agent are not merely limited to the clearing of the import and export consignment. The CHA also renders the service of loading/unloading of import or export goods from/at the premises of the exporter/importer, the packing, weighment, measurement of the export goods, the transportation of the export goods to the customs station or the import goods from the custom station to the importers premises, carrying out of various statutory and other formalities such as payment of expenses on account of octroi, destuffing /pelletisation terminal handling, fumigation, drawback/DEEC processing, survey /amendment fees, dock fees, repairing and examination charges, landing and container charges, statutory labour charges, testing fees, drug control formalities, sorting /marking/stamping/sealing on behalf of the exporter/ importer. The custom house agent incur various other expenses such as crane/fork lift charges, taxi charges, Photostat and fax charges, bank collection charges, courier service charges, and miscellaneous other expenses on account of the importer /exporter. For all the above charges, the CHA is ordinarily reimbursed by the importer/ exporter for whom the above services are rendered. Apart from the above charges, the CHA also charges the client for his services under the head /nomenclature of “agency and attendance charges “ or similar kind of heads which is purported to be his service charge in respect of the services rendered in relation to the import/export goods.
A CHA may have various branch officers located at different stations but all these branch officers do not raise the bills and only the main or central office will be raising the bills. In such cases only the central office should be registered with the Deptt. The Commissioners of Central Excise may verify any such contention and allow the payment to be made by Head Office.
(Ministry’s F.No.B43/1/97-TRU dt.06.06.1997)
Value of Taxable Service:
Value of the taxable service shall be the gross amount charged by the service provider for such service rendered by him.
(Section 67 of Finance Act,1994 as amended)
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 obtaining is to show the charges for service 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, custom duties, port dues etc) and various other reimbursable expenses incurred are not to be included for computing the Service Tax.
In many cases the customs house agent provides services for “turnkey” imports and exports where a lump sum amount is charged from the client for undertaking various services. The said 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. In such cases, the value of the taxable Service Tax shall be 15% of the lump sum amount charged to the client. The custom house agents would have to show the service charges as 15% of such lump sum amount of the bills. Service Tax of 5% will be chargeable on the above 15%.
Sometimes the bills raised by the CHA are not entirely paid by the client and the CHA is forced to give discounts. In such cases where the final bill raised is lower than the initial bill, it may be mentioned that the law provides for claiming of refund of excess Service Tax paid within six months from the date of payment of tax. If the CHA can produce evidence of having charged less service fee, he may claim refund of excess Service Tax paid, if any, as per the provisions of law.
(Ministry’s F.No.B-43/1/97-TRU dt.06.06.1997)
Exemption/Exclusion:
1. Sometimes CHAs sub-contract their work to CHAs located in other stations. In such cases it is possible that the sub-contracting CHA raises the bill on the main CHA who in turn raises the bill to the client. It has been decided that in such cases the sub-contracting CHA will not be required to pay Service Tax on the bills raised by him on the main CHA. The Service Tax will be payable by the CHA who provides the actual service to the client and raises the bill to the client.
(Ministry’s F.No.B-43/1/97-TRU dt.06.06.1997)
2 The payment received by the Custom House Agent from the Shipping Lines for canvassing of Import/export cargo, would not be chargeable to Service Tax.
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