2005 (3) TMI 574 - AT - Central Excise

Tribunal Rules No Service Tax for Providing Manpower in Mechanized Packing and Loading; Not Cargo Handling.

J & J ENTERPRISES Versus COMMISSIONER OF CENTRAL EXCISE, RAIPUR

The Appellate Tribunal CESTAT, New Delhi, allowed the appeal, determining that the appellant is not rendering 'cargo handling services' as defined by ... Imposition of - Cargo handling Services - Manpower supplier Or Cargo handler - Whether individuals undertaking the activity of loading or unloading of cargo would be leviable to service tax - HELD THAT:- The role of the manpower is to fix the HDPE bag on the mouth of packing machine, oversee of the flow of the bags on the conveyer and to correct if any error takes place and guide the boom in regard to stacking. In this highly mechanised cargo handling, the appellant is neither the owner of the machines nor has it rented out the machine. It is a complete outsider to the main cargo handling activity. It is also not responsible for the handling activity. It supplied the manpower, which render a supportive and ancillary role. The appellant’s employees, neither as a group, nor as individual, packs or loads cement. Packing or loading cement is not the job contracted out to the appellant. This position is made clear by the labour contract. The facts and circumstances make it clear that the appellant is not rendering cargo handling service. In the given factual situation, cargo handling cannot take place in the absence of packing machine and conveyer. The appellant has no control on them. The appellant is right in his contention that it is only supplying manpower and supplying manpower cannot be equated with providing the service in question. If such a view is taken, who ever supplies the manpower for an activity would become the provider of the activity itself. If manpower is supplied for construction, the manpower supplied would become the builder. This view is against the specific definitions of various services in the statute. Thus, the appeal is allowed after setting aside the impugned order. Issues:1. Whether the appellant is rendering 'cargo handling services' to a company and liable to pay service tax on the amounts received.2. Whether the appellant's activity fulfills the criteria of being a cargo handling service renderer based on the nature of services provided.3. Interpretation of the definition of cargo handling services as per the statute and its application to the appellant's case.Issue 1:The appeal challenges the finding that the appellant is providing 'cargo handling services' to a company and is required to pay service tax. The appellant argues that they only supply labor for managing various points in the mechanized process of packing and loading cement bags, emphasizing that the laborers play a secondary role in the process. The appellant contends that they do not own the machinery used in packing and loading, and their role is merely to supplement the mechanized operations conducted by the cement manufacturer. The appellant asserts that they are not engaged in cargo handling but are solely a manpower supplier.Issue 2:During the hearing, the appellant demonstrated the mechanized packing and loading activity, highlighting the limited role of their laborers in the process. The appellant's position is supported by the terms of the contracts, which specify that they provide support for packing and loading based on the Cement Wage Board rate. The appellant's counsel argues that their laborers do not engage in essential cargo handling activities like loading, unloading, packing, or unpacking, but rather provide supervision and assistance in the mechanized operations. The appellant maintains that their activity does not meet the criteria of a cargo handling service renderer.Issue 3:The definition of cargo handling services under the statute includes loading, unloading, packing, or unpacking of cargo. The appellant's case is analyzed in light of this definition, focusing on whether the appellant is directly involved in these activities. It is observed that the appellant's role is limited to overseeing and guiding the mechanized packing and loading process, without owning or renting the machinery involved. The appellant's employees do not directly engage in packing or loading cement but provide ancillary support. The judgment concludes that the appellant is not rendering cargo handling services as defined by the statute, as they do not perform the core activities of loading, unloading, packing, or unpacking of cargo. Therefore, the appeal is allowed, setting aside the previous order requiring the appellant to pay service tax for cargo handling services.This detailed analysis of the judgment highlights the key arguments, interpretations of legal definitions, and the ultimate decision reached by the Appellate Tribunal CESTAT, New Delhi.