TMI Blog2023 (9) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... port based on the authorization granted by the Port Authority. Here Appellant was not authorized by the port for rendering the activity on behalf of port. Therefore, the respective services in question rendered during the relevant period by the present appellant within the port area cannot be charged service tax under the category of port service . Availment of Cenvat credit on inputs/capital goods by the appellant - HELD THAT:- On close reading of input definition under Rule 2(k) of the Rules as above, it is clear that Clause (i) covers all goods, except as specified, used in or in relation to the manufacture of final product. On the other hand, Clause (ii) in Rule 2(k) covers all goods except specified therein, used for providing any output service. In short, Clauses (i) and (ii) are applicable for manufacturer and output service provider respectively. The present case relates to output service provider. There is no dispute that the appellants herein are not manufacturer and covered under Clause (ii) of input definition. The words all goods , if read with used for providing any outpu service in Clause (ii) of Rule 2(k) of Rules, 2004, make it clear that any go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation of cargo form ship to shore and vice versa by the vessel/tug/barge owned by the Appellant, and the service rendered by the appellant is in relation to vessels and goods in the port area. Hence it appeared that the service of appellant are in the nature of service related to port and is classifiable under port service. On further scrutiny of the documents relating to availment of input Cenvat credit, it was found that appellant had wrongly availed input Cenvat credit of Rs. 3,54,592/- in various goods either as inputs or capital goods viz. steel, plates, H.R. Plates, angles etc. . On being asked by the audit team, it was revealed that the said goods were used in construction of barges by the appellant. The said barges were got constructed by employing fabricators who are engaged in such kind of business. The barges so constructed were used by the Appellant in providing taxable output service in the category of supply of tangible goods, transportation of goods by sea water, and port service. It was alleged that the goods on which appellant have availed credit as input appeared to be not covered under either as input or as capital goods. Further it was noticed that appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of cargo. Mostly, appellant used barges for transportation of imported cargo from ship to shore or vice versa in sub-contract with M/s Shreeji Shipping. Appellant are not providing any port service but their barges were allowed to be utilized by M/s Shreeji Shipping, Jamnagar and others for transporting imported cargo from ship to shore by charging an amount per MT for specific period or on time chartered basis i.e. fixed amount for specified duration say month etc. Thus, the appellant was not providing any port services as defined under Section 65(105) of the Finance Act, 1994 till 16.05.2008. 2.2 He also argued that the impugned show cause notices did not propose that why its activities should not be classified as Other Port Service under Section 65(105)(zzl) of the Finance Act, 1994 as it stood at material time. The show cause notice simply discusses provisions of finance Act 1994 viz., Section 65(105)(zn) read with Section 65(81) for Port Services and provisions of Section 65(105)(zzl) of the Finance Act, 1994 and straight way jumped to the conclusion that barge and tug income is a Port Service rendered by it in relation to vessels and goods within the port area and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to vessels within port area but even if for the sake of argument it is assumed that license and authorization is same then also it has to be provided any service in relation to vessels or goods within port area. Appellant had supplied barge to its clients by charging amount for certain period on time chartered basis and the clients had used such barges for providing services in relation to vessel and goods by transporting cargo from ship to shore within port area to their clients. Thus, supply of barge to clients by any means cannot be considered as provision of service in relation to vessel and goods that too within port area. 2.6 He also submits that appellant rendered services of sea transportation viz. from Ship to shore or vice versa with the help of barges which cannot be classified under the category of Port Service defined under clause (zn) or (zzl) of clause (105) of Section 66 read with clause (82) of Section 65 of the Finance Act, 1994 as amended. Appellant has paid service tax under the appropriate category i.e. Supply of tangible goods w.e.f. 16.05.2008 for the service provided when barge were given on time chartered basis. Appellant has also paid service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so submits that Ld. Commissioner while passing Order-In-Original No. 60/Commr/2012 dated 16.10.2012 in the case of M/s Shree ji Shipping Service (India) Ltd., had deliberated the issue, which is identical to the present case, in detailed and held that assessee was entitled for Cenvat credit on such input utilized in repairing of barges. The Ld. Commissioner without assigning any reason for departing from his earlier stand taken while passing impugned order as well as clarification issued by the board vide circular dated 23.12.2008 tired to justify with mis-directing himself by relying upon totally different decision of Tribunal in the case of M/s Mundra Port and SEZ Ltd. Vs. CCE, Rajkot 2009 (13)STR 178 and found that in the present case the goods used by the appellant is not directly used for providing output services . 2.9 He further argued that impugned show cause notice is time barred. The impugned notice is issued on 19.04.2011 covering period from 2005 -06 to 2009-10 under proviso to section 73(1) of the Finance Act, 1994. It is not the case of department that appellant has suppressed anything from the department or has appellant mis-declared anything. Nonpayment of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt or other port. But in the definition of Port Service after the amendment of 1-7-2010, the focus/emphasis is on any service rendered within a port or other port. Thus prior to the amendment of 1-7-2010 each and every service rendered within a port or other port cannot be covered by the category of Port Service unless it was specially rendered by such Port (a port or other port) or by a person authorised by such Port or other Port. 4.2 In this context, reference is made to CESTAT, Ahmedabad s decision in the case of Shreeji Shipping v. CCE, Rajkot :2014 (36) S.T.R. 569 (Tri. - Ahmd.). In the said decision it was held that the services rendered by anyone within the port would be taxed under the head of port services only w.e.f. 1-7-2010, when there was amendment to the port services . In CESTAT, Bangalore s decision in case of Aspinwall Co. Ltd. - 2011 (21) S.T.R. 257 (supra). CESTAT, Bangalore also quoted the decision of Velji P. Sons (Agencies) P. Ltd. (supra). The relevant Paras from the said decision are reproduced below: 16.1 In the case of Velji P. Sons, the facts were: the assessee therein was rendering the services of hiring of the barges, cranes, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority of the Port on the person so issued with the licence. If the licences issued by the Port are taken as authorization, then such licences issued to Stevedores, ship chandlers, labourers, repairers of the vessels etc. would also become authorized persons by the Port to render services as Port services. 7. We further note that Section 42 of the Major Port Trusts Act provides for authorization by the Board for various services specified by that Port in the Official Gazette. For such authorization if effective, the same should have prior approval of the Central Government and the person so authorized cannot charge any excess payments than the amount specified in the tariff authority for Major Ports, by Notification in the Official Gazette. The licenses issued to the appellant are not governed by the statutory requirement of Section 42 inasmuch as the appellant is free to charge any amount from its customers for the services being provided by it and such collections are not regulated by the Port. In this view of the matter, the licence given to the appellant cannot be held to an authorization (emphasis supplied). 8. Licence means a permission given for specific purpose; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Appeal Nos. 2429-2430 of 2008 along with an application for condonation of delay before the Hon ble Supreme Court. Their lordships on 24-3-2008 passed the following order. Delay condoned. The Tribunal, relying upon its own decision in the case of M/s. Homa Engineering Works v. CCE, Mumbai, has allowed the present appeal filed by the assessee. Against the aforesaid case in M/s. Homa Engineering Works v. CCE, Mumbai, Revenue has not filed any appeal in this Court. In view of this, this appeal is dismissed. No costs . 17. It can be seen from the above reproduced ratio of the judgment of the Tribunal in the case of Velji P. Sons (Agencies) (P.) Ltd. that the facts, of that case and the facts in these cases before us are identical wherein various services were rendered by the appellants herein within the port area. Since the ratio of the judgment of the Velji P. Sons is squarely applicable in this case, the judgment had also having been upheld by the Hon ble Apex Court, the ratio is binding on us. It is also to be noted that the judgment of the Hon ble Supreme Court in the case of Velji P. Sons (supra) seems to have been accepted by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant and applicable mutatis mutandis to the present facts and subject matter of this appeal. 4.4 In view of above, in respect of the services thru Barges rendered by the appellant during the relevant period, they cannot be made liable to pay service tax under the category of port services . 4.5 Further under the Port Service , service provided by a Port, other port or any person authorised by such port is taxable. The Appellant liable to pay tax under above entry only if they had been authorized by the Port to render services in relation to vessels or goods. In the present case department failed to produce any evidence by which it can be proved that the Appellant were authorized by the port for providing services at port. There is no authorization by the Port to the appellant to render the said services. Further, permissions issued by the Port authorities to the appellant cannot be considered as authorization inasmuch as the said permission was issued is basically to enter into the Port area. The appellant has merely arranged the facility on behalf of the clients and importer or exporter and not on behalf of the Port. Therefore, in the present matter conclusion of Ld. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 35. - Power of Board to execute works and provide appliances. (1) A Board may execute such works within or without the limits of the port and provide such appliances as it may deem necessary or expedient. (2) Such works and appliances may include - (a) wharves, quays, docks, stages, jetties, piers and other works within the port or port approaches or on the foreshore of the port or port approaches, with all such convenient arches, drains, landing places, stairs, fences, roads, railways, bridges, tunnels and approaches and buildings required for the residence of the employees of the Board as the Board may consider necessary; (b) buses, railways, locomotives, rolling stock, sheds, hotels, warehouses and other accommodation for passengers air goods and other appliances for carrying passengers and for conveying, receiving and storing goods landed, or to be shipped or otherwise; (c) moorings and cranes, scales and all other necessary means and appliances for loading and unloading vessels; (d) reclaiming, excavating, enclosing and raising any part of the foreshore of the port or port approaches which may be necessary for the execution of the works au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the Board s premises; (c) carrying passengers by rail or by other means within the limits of the port or port approaches, subject to such restrictions and conditions as the Central Government, may think fit to impose; (d) receiving and delivering, transporting and booking and dispatching goods originating in the vessels in the port and intended for carriage by the neighbouring railways, or vice versa, as a railway administration under the Indian Railways Act, 1890 (9 of 1890); (e) piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels; and (f) developing and providing, subject to the previous approval of the Central Government, infrastructure facilities for ports. (2) A Board may, if so requested by the owner, take charge of the goods for the purpose of performing the service or services and shall give a receipt in such form as the Board may specify. (3) Notwithstanding anything contained in this Section, the Board may, with the previous sanction of the Central Government, authorize any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of vessels, passengers or goods, (2) Different scales and conditions may be framed for different classes of goods and vessels. Section 49A. - Fees for pilotage and certain other services. (1) Within any port, fees may be charged for pilotage, hauling, mooring, remooring, hooking, measuring and other services rendered to vessels, at such rates as the Authority may fix. (2) The fees now chargeable for such services shall continue to be chargeable unless and until they are altered in exercise of the power conferred by sub-section (1). (3) The Central Government may, in special cases, remit the whole or any portion of the fees chargeable under sub-section (1) or sub-section (2) . 8. After carefully going through the submissions made by both the sides and after going through the relevant provisions of law, as extracted above, we find that taxable services under the net of Port Service means any service rendered by a port or any person authorized by such port. As such, the services which can be taxed under the said category have to be either services rendered by port itself or any person authorized by such port. Admittedly, repair of the vessel is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re used for repairing of barges and vessels. The inputs were required to keep the barges /vessels in running condition and without repairing the same could not be utilized for providing output service. The said materials was nothing but goods which were used for providing output service within the meaning of definition of input under Rule 2 (k)(ii) of the Cenvat Credit Rules, 2004. We reproduce below the definition of Input under Rule 2 of CENVAT Credit Rules, 2004:- (k) input means - (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting-oils, coolants, accessories of the final products cleared along with the final product; goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The inputs on which appellant availed credit was used for the purpose of repairs of barges and vessles which in turn were used for providing output service of appellant. We are therefore of the view that appellant is entitled for Cenvat credit on such inputs utilized for repairing and manufacture of barges. 4.11 As regard the submission of the appellant regarding demand for the extended period being time barred, we find that the issue involve is pure interpretation of taxability of the service. On the very same issue in the appellant s own group company s matter in Shreeji Shipping - 2014 (36) STR 569 (Tri.- Ahmd.) similar demand was set aside by Tribunal. Therefore, in the present case the period is subsequent to the earlier one and in the light of Apex Court judgment in the case of Nizam Sugar Factory Vs. Collector of Central Excise, A.P. - 2006 (197) ELT 465 (SC) any subsequent show cause notice on the same issue, extended period cannot be invoked. Moreover, in the case of Shreeji Shipping (Supra) also the Tribunal had expressed the following view in the context of time bar:- 21. We also find considerable force in the submission of the appellant that a substantial por ..... X X X X Extracts X X X X X X X X Extracts X X X X
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