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Circular No. 121/3/2010-ST
F.No.332/29/2009-TRU
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
(Tax Research Unit)
*****
New Delhi-110001 dated the 26
th
April, 2010.
To
Director General of Service Tax, Mumbai
Director General of Central Excise Intelligence, Delhi
Chief Commissioner of Central Excise (All)
Chief Commissioner of Customs and Central Excise (All)
Commissioner of Service Tax (All)
Madam/Sir,
Subject: Service tax on Container Detention Charges - regarding
Generally marine containers are temporarily brought into a customs territory and have to be re-exported within a specified
period. Normally, a Full Container Load is taken out of the port and the activity of stuffing or de-stuffing takes place at the
premises of the exporter/importer. The shipping companies / steamer agent provide a pre-determined period within which the
container (that has gone out of the port) is to be returned. This is called as 'pre-holding period' and the duration of the same is
mentioned in the contract. In case there is any delay on the part of the customer in returning the container, the charges known
as 'detention charges' are collected over and above the contracted amount by the shipping line.
3. Representations have been received in the Board that service tax has been demanded on such 'detention charges' under
the 'Business Support Service (BSS)' or 'Business Auxiliary Service (BAS)'.
4. The issue has been examined. To retain the container beyond the pre-holding period is neither a service provided on behalf
of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the
customer (Business Support Service). Such charges can at best be called as 'penal rent' for retaining the containers beyond
the pre-determined period. Therefore, the amount collected as 'detention charges' is not chargeable to service tax.
5. The Board desires that pending cases, if any, on this issue may be decided in line with the above clarification.
Yours faithfully,
(Gautam Bhattacharya)
Joint Secretary (TRU-II)
Tel: 2309302
circulars no 121 2010 | iKargos