P. Anjani Kumar ORDER
S.S. Garg, Member (J)
1. The present appeal is directed against the impugned order passed by the Commissioner of Service Tax, Cochin dated 31/12/2014 confirming the demand of service tax of Rs. 84,81,190/- (Rupees Eighty Four Lakhs Eighty One Thousand One Hundred and Ninety only) under the category of "Customs House Agent Services" for the period 2008-2009 to June 2012 and Rs. 10,50,656/- (Rupees Ten Lakhs Fifty Thousand Six Hundred and Fifty Six only) on margin earned on trading of freight for the period from July 2012 to March 2013 along with interest and penalty under Section 76 and 77(2) and 78 of the Finance Act, 1994. Briefly the facts of the present case are that the appellant is a private limited company and is mainly engaged in the business of freight forwarding wherein it undertakes various activities in relation to transportation of goods in the course of import/export by sea and air. Appellant is also authorized to act as Customs House Agent under Customs House Licensing Regulations 2004 and has been granted license of Customs House Agent. Appellant has entered into contracts with M/s. Vodafone Essar group of companies for supply of Freight Forwarding Services dated 28/08/2009 for Kerala Circle, the appellant also acts as CHA in terms of the work order entrusted by the Vodafone entities which were subsequently converted into an item rate contract for provision of Customs House Agent Services. In terms of the work order/item rate contract, the appellant provided CHA Services for import and export of goods wherein the scope of the work inter alia consists of the following:
a) To process the customs clearance documents with Customs and Central Excise
b) To arrange to pay the customs duty and warehousing charges
c) To arrange Customs inspection/examination and co-ordinate the delivery
The appellant has also entered into an agreement dated 01/04/2010 with M/s. BPL Limited for integrated logistics service which includes freight forwarding and clearing services and customs house agent services. Though the contract is a single contract for provision of both freight forwarding and CHA services, but the terms of contract clearly demarcate the activity of CHA and rest of the activities as separate and distinct. Appellants have also entered into an agreement with various Overseas Freight Forwarders or Foreign Console Agents for the purpose of shipment of merchandise from the place of foreign customer destination to port of Lading in foreign country and vice versa in case of import or export as the case may be. As per the arrangement, the appellant remits freight charges to the Overseas Freight Forwarders and usually marked as miniscule percentage as padding to cover appellant's office expenses, and quote the same to importer in the form of CAN invoice. Appellant were collecting service tax amount billed in the CAN invoice for the local charges barring the freight amount from its customers during the disputed period. After verification of the financial records and the ST-3 returns of the assessee, Department observed that the appellants had collected only nominal charges in respect of CHA services and other services and a sizable mark up was loaded in the freight charges and has evaded the service tax on CHA services. On this premises based on the audit, a show-cause notice was issued for the period April 2008 to March 2013 proposing to demand service tax on diff........