TMI Blog2022 (5) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... or storages beyond the Warehousing period included in package rate, all appellant s are paying Service Tax under category of Storage Warehousing Services . All CFS are paying Service Tax on reverse charge basis for transportation of cargo under taken by their contractors from CFS to port and vice verrce. For the period of Storage included within the consolidated package for handling import or export cargo no separate Service Tax need to be paid under the category of Storage and warehousing charges. However, for the period exceeding such period i.e. (the period included in the packages) if any storage and warehouse charges are collected the same are liable to service tax both in respect of import and export cargo - there are no merit in the argument of Revenue that the activity of Cargo Handling in the Container Freight Station is incidental to the Storage and Warehousing activity. From the discussion it is apparent that storage in the container freight station is only incidental to the cargo handling activity. The main purpose of the Container freight Stations is to handle cargo for the purpose of import or exports. The main purpose of the container Freight Stations is not Stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST/11582/2015 ST/11719/2014 Honeycomb Logistic P. Ltd. CCE ST, Rajkot (i)April,2010 to June 2012 (ii)2007-2008 to 2011-2012 (i)Rs.19,19,937/-with equal Penalty (ii)Rs.1,95,28,737/-with equal Penalty. Also Penalty u/s 76,Penalty of Rs.10000/-u/s.77 (i)18.10.2013 (ii)04.12.2012 (i)30.09.2014 (ii)13.12.2013 2. Learned Counsel for M/s Seabirds Marine Service Pvt. Ltd. pointed out that they are a CFS (Container Freight Station) involved in the activity relating to import and export of goods. He pointed out that demand under the head of Storage and Warehousing Services invoking extended period of limitation was confirmed against the appellant. 2.1 Learned Counsel stated that with regard to import and export of goods services like movement / transportation of containers cargo from CFS to Port and vice versa, handling and storage, stuffing and destuffing of cargo, arrange examination of cargo, handling of empty container etc. are provided in CFS. 2.2 Learned Counsel stated that the Appellant was registered with the Service Tax Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s charged based on per ton/ per day basis as provided in the Tariff Card. However, there could be cases where the cargo is received stuffed into the containers on the same day without incurring any storage charges or the Appellant do not charge any consideration for export cargo stored for the agreed period / days, after which, the storage of export cargo is charged as per the rates specified in the Tariff Card. For the consideration received towards storage of cargo, the Appellant was duly paying service tax under the taxable head storage and warehousing service . 2.5 Thereafter, once the CHA obtains permission of Stuffing Allowed , the empty container is placed at the stuffing point at the warehouse and the container is stuffed with the cargo. In the stuffing process, the cargo is handled and taken from the warehouse and stuffed inside the container either by manual labour or by forklift. For this process also, the Appellant engages H T Contractor, who raises a bill on the Appellant for such cargo handling services provided by them. The H T Contractor does not charge service tax on such handling of export cargo. 2.6 The stuffed container is thereafter stacked and stored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under the criteria of Storage and Warehousing Service (ii) Service of Handling of Cargo provided in CFS area was classifiable under the category of Cargo Handling Service only when it was provided in the context of transportation and when incidental to freight. It was held that the Appellant provided place for keeping cargo goods, loading, unloading, stuffing, security handling/storage and warehousing of empty containers etc. facilities within their CFS and therefore, the said services cannot be considered in the context of transportation, but were in relation to Storage and Warehousing Services . (iii) The Appellant artificially split charges into 2 categories (1) Storage and Warehousing Services and (2) Cargo Handling Services except in the case of charges collected for Handling of Export Cargo by claiming the benefit of specific exclusion in the definition of Cargo Handling Service . (iv) The Revenue relied upon Circular No. B11/1/2002-TRU dated 01.08.2002 to support the contention the service provided by the Appellant falls under Storage and Warehousing Services . It was held that the Appellant paid service tax under the category of Storage and Warehous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omer. Therefore, if lumpsum amount is charged for both transportation and cargo handling, the tax will be payable on the entire amount. On the other hand, if the bill indicates the amount charged for cargo handling and transportation separately on actuals basis (verifiable by documentary evidence), then the tax would be leviable only on the cargo handling charges Annexure III Storage and warehousing services 5. It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. It is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area. 10. Another point made by the CWC is that they engage handling and transport contractors (H T contractors) to provide handling and transport services who would be charging them service tax for cargo handling services. CWC add supervision c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to freight. He relied on the Board Circular No. 104/7/2008-ST dated 06.08.2008 wherein the Board clarified that transportation is not an essential character of Cargo: Handling Service but only incidental to Cargo Handling Service . 2.12 Learned Counsel stated that the Appellant submits that in terms of the Tariff Card, the Appellant provided free facility for storage of goods for import and export cargo to its client for specific period of time. If the cargos are stored for more than the specific period mentioned in Tariff Card, the Appellant charged extra amount towards Storage and Warehousing Services along with Service Tax. 2.13 Learned Counsel argued that the Revenue failed to appreciate that if the handling and transportation activities in relation to the said Cargo/Containers were also to be classified under storage and warehousing services , then there would not be any service provided by a Container Freight Station classifiable under the category of cargo handling services . In such a scenario, the definition of Cargo Handling Services to the extent it covers handling of cargo services provided by a Container Freight Terminal' will become redundant and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that The Show Cause Notice had raised a demand for the period 2006-07 to 2010-11 and had been issued on 16th April, 2012, Invoking the longer period of limitation. Learned Counsel argued that the extended period of limitation could be invoked only in a case where the service tax had not been paid on account of fraud, collusion, and wilful mis-statement, or suppression of facts with an intention to evade payment of tax. Learned Counsel stated that the Appellants were duly registered with the service tax department under the categories of Cargo Handling services, Storage and Warehousing services, Renting of Immovable Property, and as an Input Service Distributor. Further, the Appellants were duly filing Returns and paying service tax in respect of all their taxable activities. He failed to appreciate that the Appellants had in their ST-3 Returns, disclosed particulars of the services that were excluded under the taxable category of cargo handling service and therefore there was no suppression on the part of the Appellants. 2.19 Learned Counsel argued that the Revenue ought to have appreciated that when the Appellant was not liable to pay any tax, then the question of imposing pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Cargo Handling Services. Learned Counsel relied on the decision of Hon ble High Court of Kerala in the case of Kerala State Industrial Enterprises Ltd. Vs. CCE,. C S.T., Kochi -2012 (28) STR 574 (Ker.) 3.2 He argued that in the instant case they are charging tariff for handling of cargo at specified rate for all exports and imports. The tariff card specifically lays down the amount i.e. chargeable for storage in excess of free time allotted as per in tariff card for cargo handling storage. He argued that they are paying Service Tax on such storage charges collected by them for the period over and above the free period allowed as per the tariff card. On such charges the appellant s are paying Service Tax at the applicable rates. Learned Counsel relied on para 27 and 28 of the decision of third member resolving the difference of opinion in the case of Gujarat Chem. Port Terminal Co. Ltd. Vs. CCE C., Vadodara-II- 2008 (9) STR 386. 27. I agree with the learned advocate that no port can practically operate as a port without having the storage facility. In as much as the port in question was a specialized port, set up with the stated objective of handling the bulk liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -cleaning service provider? The answer to both the above propositions would be an emphatic NO . Applying the above analogy to the fact of the present case, it has to be held that the appellant is a minor port which was leviable to tax w.e.f. 1-7-03 and any incidental services of storing the goods in terms of legal obligations of Rule 42 of the Major Port Trust Act, cannot be separately made liable to tax as storing and warehousing services. 3.3 Learned Counsel also relied on the decision of tribunal in the case of Associated Soapstone Destributing Co.Pvt. Ltd. Vs. CCE - 2014 (34) STR 865. He relied on para 5 of the said judgment as under: 5 . After hearing both sides, we find that issue involved is whether activity undertaken by the appellants falls under the Site Formation, Clearance and Excavation and Earthmoving and Demolition services as contended by Revenue or under Mining Service as contended by the appellants. For the sake of convenience, Section 65(97a), 65(105)(zzza) and Section 65(105)(zzzy) are reproduced below :- Section 65(97a) Site formation and clearance, excavation and earth moving and demolition includes (i) Drilling, boring and core ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of this Tariff Card,(Page No.167 to mainly the Tariff of Exports, it is very clear that appellant was recovering two types of charges one related to Cargo Handling and other for Storage Charges . For Export, composite charges includes carting, stuffing, de stuffing movement of loaded container to MICT/MP SEZ. These charges are covered under 'Cargo Handlings Service' whereas the Storage Charges for Export and storage charges for back to town cargo' are not covered under 'Cargo Handlings Service and therefore, covered under 'Storage Warehousing Service' as defined. 3.6 Learned AR argued that Tariff Card existing embodying separate contracts for each kind of service provided and Revenue has not attempted to vivisect composite services as there is no single composite service and Tariff Card is not for composite contract as each head of reimbursement billed and separately charged and therefore amounts recovered under independent separate clause of agreement of rate schedule constitute independent and separate service. This view is upheld by the Hon'ble Tribunal in the case of Deep Chemicals Vs. Commissioner of Service Tax, Ahmedabad 2019 (21) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for storing the goods over and above the free days. Thus, these charges are collected with clear motive to provide 'storage and warehousing facilities' and therefore, cannot be termed as 'cargo handling service'. 3.11 Learned AR also stated that so far as the export of Agri produces is concerned, matter should be remanded back for quantification of storage and warehousing service' rendered to Agri produces. 3.12 Learned AR relied on the Following case laws: (5.7) 2015 (37) STR 555 (Tri.- Mum)- CCE, Raigad Vs. MAERSK India P. Ltd. 2020(42) GSTL 98 (Tri-Hyd)- Tinna Oils Chemicals Ltd Vs.CCE, CCE,Raigad Vs. Visakhapatnam-I 2016 (46) STR 470 (Tri.-Mum)-Crescent Organics P Ltd. Vs. CCE, Mumbai- IV 2019 (25) GSTL 226 (Tri.-Hyd)- Duraflex Services Constuction Technologies Ltd Vs. CCE, Visakhapatnam-I 2019 (21) GSTL 26 (Bom) APM Terminals India P Ltd Vs. CCE, Navi Mumbai 2019 (25) GSTL 226 (Tri- Hyd) Duraflex Services Construction Technologies Ltd Vs. CCE, Visakhapatnam-I 4. We have considered rival submissions. We find that the issue common in all the cases is if the appellant s are required to pay Service Tax on Services pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation of cargo. The taxable service, as per sub-clause (zr) of clause (90), is any service provided, to any person, by a cargo handling. agency in relation to cargo handling services. 3.The services which are liable to tax under this category are the services provided by cargo handling agencies who undertake the activity of packing, unpacking, loading and unloading of goods meant to be transported by any means of transportation namely truck, rail, ship or aircraft. Well known examples of cargo handling service are services provided in relation to cargo handling by the Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations this is only an illustrative list . There are several other firms that are engaged in the business of Cargo handling services. 3.1 The services provided in relation to export cargo and passenger baggage are excluded from tax net. 3.2 Mere transportation of goods is not covered in the category of cargo handling and is therefore not liable to Service tax. 3.3 Cargo handling service provided in relation to storage of agricultural produce (scope of the term agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house keepers . It is clarified that if the storage and warehouse keeper undertakes cargo handling services also and raises its own bill to the customer for such service, then he would be liable to pay service tax under the category of cargo handling services also. However, he would be eligible to take credit of service tax paid on cargo handling services rendered by the H T contractors and adjust the same against his service tax liability on cargo handling services provided he raises a separate bill for the same to his client . In other words, he cannot adjust the credit against storage and warehousing service charges. In the aforesaid background it can be seen that the Board clearly prescribed that the Service Tax provided by Container Freight Stations would fall under the category of Cargo Handling Services and the services provided by the Warehouse keepers would fall under the category of Storage and Warehousing Services . It also clarified that in case CFS offers total package rate, which included transportation and handling in respect of loading containers from port to CFS and if the Cost of transport is separately in the bill the same will be excluded from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the authorities including the Tribunal have chosen to find out whether from out of the terminal charges collected by the appellant from the Airlines, any portion is attributable to storage and custody after completion of the formalities and handling of the goods at the terminal building. In other words, if the appellant has standard rates based on quantity, volume or type of cargo or the nature of handling of cargo or passenger baggage in the terminal building irrespective of the time taken for the same within the cut off period of 48 hours, then such charges cannot be treated as charges collected for storage or warehousing of goods. However, if on examination of the records and the appellant s operation with the Airlines the department notices that varying charges are levied, though under the common head terminal charges, then so much of the amount charged in excess of the normal charges for clearance without delay, can be subject to levy of service tax under Section 65(102) of the Act. The appeals are allowed in part reversing the findings of the Tribunal that terminal charges levied by the appellant attracts service tax under Section 65(102) of the Act, but with the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties are not relating to storage and warehousing of cargo. To complete these processes some time is taken and during this time, the cargo is held by the appellant in a secured area. The cargo brought by exporters are not for storage or warehousing in the airport. The cargo is brought for shipment and the shipment happens at the earliest available opportunity. Till the shipment, the cargo is held for a short duration by the appellant. During this duration, various activities to make the cargo fit for shipment is undertaken. As such, we are in agreement with the appellant that they are not involved in providing storage and warehousing service with reference to the cargo. As such, there is no tax liability under this tax entry for the appellant up to 9-9-2004. 6. With the introduction of airport service w.e.f. 10-9-2004, we find that the appellants are correctly liable to tax under this tax entry. The taxable service under this category is defined in Section 65(zzm) as service provided to any person, by airport authority or by any other person, in any airport or a civil enclave. Admittedly the appellants are an airport authority involved in providing service in the airport. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of storing of import or export cargo; the cargo received in their area are required to be handled either before or after providing the service of storing or warehousing and without such handling activity the service or storing or warehousing is not possible. Therefore, I find that such handling services provided within the CFS area is not an independent activity to get classified under the separate category of cargo handling services just because cargo is handled and hold that the activity carried out by the Noticee is a part of their storing and warehousing services in the CFS and does not fall under Cargo Handling Services as contended by them. 9. In this regard, I find that the notice has provided space for loading docks for stacking, to store/keep cargo meant for container export, bulk expert, handing of loaded as well as empty containers, storage of cargo arrived in import with additional benefit of inventory, safety/security of cargo and insurance cover to cargo kept under Storage and Warehouse and mobilize them, provided them with facilities of cranes and forklifts. Therefore, I find that the said activities carried out by the notice were an integral part of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to get classified under the separate category of cargo handling simply because of the fact that cargo is handled. As such, the activity of handling of cargo by the noticee as a part of their storing and warehousing services in the CFS does not fall under cargo handling services as contended by them. 13. In this regard, I find that the Noticee is paying service tax under the category of Storage and Warehousing Services in the case of storage of imported cargo but in the case of storage of export cargo they are not paying service tax by classifying the same services under the category of Cargo Handling Services even though the nature of service rendered for import and export is identical. This can only be to wrongly avail the benefit of the exemption available for export cargo. In view of my discussions above, I find that the cargo /goods received in their area were not merely handled, but were provided with facility of storage, security and other amenities normally provided by a storage and warehouse keeper. The services so provided by them have the essential character of Storage and Warehousing Services . Therefore, the services provided by the Noticee are incidental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export. Such goods are in transit either into India or outside India. All the appellant s have pointed out that they have fixed rates for handling different sizes of container of cargo for the purpose of processing within the container freight station. All of them asserted that storage and warehousing charges are levied only if the period of such storage and warehousing that exceeds the minimum period prescribed in the package rates for processing of goods. 4.7 In view of above we do not find any merit in the argument of Revenue that the activity of Cargo Handling in the Container Freight Station is incidental to the Storage and Warehousing activity. From the above discussion it is apparent that storage in the container freight station is only incidental to the cargo handling activity. The main purpose of the Container freight Stations is to handle cargo for the purpose of import or exports. The main purpose of the container Freight Stations is not Storage and Warehousing. In these circumstances, we do not find any merit in the order of Lower Authorities. 4.8.1 Revenue has relied on the decision of Tribunal in the case of CCE, Raigad Vs. MAERSK India P Ltd.-2015 (37) STR 555 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including reservation of space, they deliberately avoided mentioning of the rental for the space reservation and increased the charges for cargo-handling which amounted to deceit on the part of the appellant. Accordingly he confirmed the demand for the period 1-2-2005 along with interest and also imposed equivalent amount of penalty both under Sections 76 and 78 of the Finance Act, 1994. Hence the appeals before us. It is seen that the facts of this case are significantly different in the case in hand. 4.8.2 The Revenue have also relied on the decision the case of Tinn Oils Chemicals Ltd Vs. CCE, Visakhapatnam-I- 2020(42) GSTL 98 (Tri.-Hyd). In the said order in para 12 following as observed: As far as the payment in question is concerned, the demand is on the entire amount which the appellant has received under the agreements. The salient features of the agreement as discussed above would show that the services required of the appellant are not just of storage or warehousing but are essentially one of stevedoring and handling the cargo. They receive the export cargo and carry out all essential operations to ensure that they are finally loaded into the ship. Since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Where cargo is received by road and directly taken to port for shipment 255.00 107.00 235.00 Notes: (i) Above rates are inclusive of one month free storage and for tween decker vessel. Rebate of Rs. 25/- pmt will be available to TIA for bulk carriers. (ii) Further rebate of Rs. 10/- pmt will be available where quantity handling crosses 100,000 mts and additional Rs. 5/- pmt where quantity handled crosses 150,000 mts. It is understood that the rebate will be given only for the quantity exceeding the limits mentioned above. From the above it is apparent that in the said case Warehousing charges were collected only for the period exceeding 1 month. And Service Tax was levied only on the amount charged under the head of warehousing. Thus, the said case supports the conclusion reached in the instant case. 4.8.3 In the case of Crescent Organics P Ltd Vs. CCE, Mumbai-IV- 2016 (46) STR 470 (Tri.-Mum) also the facts are different. In the said case the appellant s have storage facility in Mumbai Port and were not involved in cargo handling. Consequently, it was held that the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial character of Cargo Handling Services but only incidental to Cargo Handling Services .Clarification given by the Board in Issue No. 2 is as under: 4. Issue 2 GTA providing service in relation to transportation of goods by road in a goods carriage also undertakes packing as an integral part of the service provided. It may be clarified whether in such cases service provided is to be classified under GTA service Clarification: Cargo handling 65(105)(zr)] means service [Section loading, unloading, packing or unpacking of cargo and includes the service of packing together with transportation of cargo with or without loading, unloading and unpacking. Transportation is not the essential character of cargo handling service but only incidental to the cargo handling service . Where service is provided by a person who is registered as GTA service provider and issues consignment note for transportation of goods by road in a goods carriage and the amount charged for the service provided is inclusive of packing, then the service shall be treated as GTA service and not cargo handling service. In view of above the arguments in the impugned orders that only the Car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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