TaxTMI 
TaxTMI 
2016 (2) TMI 222
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....dering services for stevedoring and transshipment of finished steel goods. The Central Excise officers of Directorate General of Central Excise Intelligence (DGCEI) conducted search operation on 13.04.2007 at the premises of M/s Essar Steel. They seized various documents of M/s Essar Steel and other documents relating to the Appellant Company. In the follow up action, the Central Excise officers recorded statements of the employee of the Appellant Company, M/s Essar Steel and GMB on different dates. A show cause notice dt.07.01.2011 was issued to the Appellant, proposing demand of Service Tax of Rs. 49,57,70,669.00 alongwith interest and to impose penalty under the various provisions of Finance Act, 1994 for the period from 01.10.2005 to 30.09.2010. It has been alleged that the Appellant had been providing the "Port services" to M/s Essar Steel. The Lighterage and Stevedoring services rendered by the Appellant in relation to the vessel or goods at the port would be classified as Port service as defined under Section 65(82) of the Finance Act, 1994, as amended and covered as taxable service under Section 65 (105)(zzi) of the said Act, 1994. By the impugned order, the Adjudicating ....
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....submits that w.e.f. 01.07.2010, both the issues, Stevedoring and Lighterage charges, are covered under the definition of Port services as amended by Finance Bill of 2010. In this context, he referred to Board Circular F.No.354/1/2010-TRU, dt.26.02.2010. He drew the attention of the Bench to the letter dt.24.08.2009 of the Chartered Accountant of GMB that they have not issued any authorization to the appellant and therefore, the Appellant is not covered within the definition of Port service prior to 01.07.2010. He referred to various decision on this issue before the Bench. He further submits that decision of the Hon'ble Gujarat High Court in the case of Kandla Shipchandlers & Ship Repairers Association Vs UoI 2013 (29) STR 233 (Guj.) is not applicable in the present case, as, in that case, the petitioners were authorized by the Port. On the other hand, the present case is squarely covered by the decision of the Tribunal in the case of M/s Shreeji Shipping Vs CCE & ST 2014 (36) STR 569 (Tri-Ahmd). Apart from that the Stevedoring & Lighterage services rendered into the SEZ unit of M/s Essar Steel is exempted from Service Tax by virtue of Section 26(i) (e) of the s....
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....there was no exemption notification under the Finance Act, 1994. He relied upon the decision of the Hon'ble Gujarat High Court in the case of Essar Steel Ltd Vs UoI - 2010(249) ELT 3 (Guj.) 7. The learned Authorised Representative also submits that the employee of the Appellant Company in his statement dt.26.08.2009 admitted the tax liability. The Appellant had not disclosed the details of the said services in their return, which amounts to suppression of facts to evade payment of tax and extended period of limitation would be invoked. He strongly relied upon the decision of Tribunal in the case of Lakhan Singh & Co and Anr Vs CCE Jaipur - Final Order No.ST/A/58310-58311/2013-CU(DB), dt.15.10.2013. The learned Authorised Representative submitted "Written Submissions" with compilation of case laws. 8. Heard both the sides and perused the records. 9. The issue involved in this appeal to be decided, is whether the Appellant is liable to pay the Service Tax on Lighterage & Stevedoring services rendered by them in relation to vessel or goods at the Magdalla/Hazira port under Port Services as defined under Section 65(82) of the Finance Act, 1994 as amended and covered as t....
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.... and coal between their terminal at Hazira and mother vessels at Hazira anchorage/ Bhavnagar/Dahej/Pipavav/Mumbai, and the Logistics Operators agree to carry out the lighterage and transshipment of the above mentioned cargos, on their own or chartered vessels. (2) The Logistics Operators guarantee that sufficient lighterage craft and other equipment will be provided by them, including licencesed Stevedores for carrying out the lighterage/transshipment operations at Hazira. (3) Manufacturers to provide all fuel required for all Operating vessels at Hazira on actual expenses to Operators. In case Manufacturers are unable to provide replenishment of bunkers at outports, Operators shall arrange for the same. (4) All dues payable towards vessels berthing, Pilotage, berth hire, employment of Tugs, watchmen and any other vessel related dues as levied by the port authorities and any taxes on the vessel will be to the Operators account. (5) All dues payable towards wharfage, loading charges and any other cargo related dues at levied by the port or other authorities to be to Manufacturers account." According to the Appellant, St....
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....purpose behind creating these services was that since a number of activities are undertaken within the premises of ports and airports, it would be easier to consolidate all such services under one head. 1.2 It was reported that divergent practices are being followed regarding classification of services being performed within port/airport area. In some places, all services performed in these areas [even those falling within the definition of other taxable services] are being classified under the port/airport services. Elsewhere, individual services are classified according to their individual description on the grounds that the provisions Section 65A of Finance Act, 1994 prescribes adoption of a specific description over a general one. 1.3 Further, both the definitions use the phrase any person authorised by port/airport. In many ports/airports there is no procedure of specifically authorizing a service provider to undertake a particular activity. While there may be restriction on entry into such areas and the authorities often issue entry-passes or identity cards, airport/port authorities seldom issue authority/permission letters to a service provider authorisin....
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.... carried as coastal cargo or through inland waterways are not charged to Service Tax. In order to provide a level playing field in the goods transport sector, I propose to extend the levy of Service Tax to these modes of goods transport. The new levy is not likely to impact the prices of essential commodities or goods for mass consumption, as suitable exemptions would be provided." 12. The Adjudicating authority classified the Lighterage and Stevedoring services rendered by the appellant under "Port Service" for the period 1.10.2005 to 30.09.2010. On plain reading of the definition of "Port service" prior to the amendment as on 01.07.2010, it is clear that any service rendered by a port or other port, or any person authorised by the said port, in any manner, in relation to vessel and goods, would come within the definition of "Port service". The Appellants contended that the services rendered by them were not authorised by port to them and it would not come within the purview of definition of port service prior to 1.07.2010. The power of GMB to authorize any person to perform any service in the Port is provided under Section 32(3) of GMB Act, 1981 as under:- (1) The Boa....
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....ny service in the Port. Section 42 of Major Port Trust Act, 1963 is reproduced below:- Section 42 - Performance of services by Board or other person. (1) A Board shall have power to undertake the following services:- (a) landing, shipping or transhipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board; (b) receiving, removing, shifting, transporting, storing or delivering goods brought 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 despatching 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 (f) ....
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....ing out the Lighterage operation of the cargo from anchorage to jetty. M/s Essar Steel entered into agreement with the Appellant to perform Lighterage operation on their behalf. The Appellant vide their letter dt.07.10.2005, informed the GMB Magdalla , Surat that the Lighterage activity will be carried out by them on behalf of the M/s Essar Steel. Thus, it may be concluded that the services rendered by the Appellant are authorized by the port, otherwise, they cannot perform the said service, which is within the ambit of the definition of port service. It is further contended that there is no need for specific authorisation from GMB. The expression in any manner, in relation to a vessel or goods in the definition of port service enlarged the scope of the definition which includes the sub-contractor, who are providing the specified port service within the port area of Gujarat, are liable to pay Service Tax. 15 We find that this issue has been discussed in various decisions by the Tribunal and the Hon'ble High Court as under:- a) Homa Engineering Works Vs CCE Mumbai-2007 (7) STR 546 (Tri-Mum) In that case, the Appellants were engaged in the business of repairing, chippi....
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....he authorisation from the port must in respect of the services, which the port itself is required to provide, and as such, authorisation would make an Assessee to step into the shoes of the Port. There is no authorisation by the port to the Appellant to conduct the services on their behalf. Licences issued by the port authorities cannot be considered as an authorisation. Section 42 of the Major Port Trust Act provides for authorisation by the Board for various services specified by that Board in official gazette. The said decision was upheld by the Hon'ble Supreme Court as reported in 2009 (13) STR J 31 (SC). (c) M/s Konkan Marine Agencies Vs CCE Mangalore-2007 (8) STR 472 (Tri-Bang) In that case, the Appellants provided Cargo Handling Services to the various exporters in relation to export of iron ore fine from New Mangalore Port. They filed a refund claim for erroneous payment of Service Tax as the export cargo is excluded from levy of Service Tax under the cargo handling service. According to the Revenue, the Appellant correctly paid the Service Tax under the category of port service and rejected the refund claim. The Tribunal allowed the appeal of the Appellant. The A....
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....vice rendered by a port or other port or any person authorised by such port or other port, in any manner, in relation to a vessel or goods." 16. According to the learned Counsel for the appellant since the assessee is a licence holder, therefore he would be the person authorized within the definition of "port service" as mentioned hereinabove. 17. We do not agree to the aforesaid contentions advanced by the learned Counsel for appellant for the simple reason that definition of cargo handling service as reproduced hereinabove and Section 65(23) clearly puts a bar with regard to the imposition of tax meant for export which also includes handling of the export cargo." (d) M/s H.K. Dave Ltd Vs CCE Bhavnagar-2008 (12) STR 561 (Tri-Ahmd) The appellants are having annual licences as steamer/stevedores agent issued by Gujarat Maritime Board. They are authorized to provide services of cargo handling and other services; they hired barges to provide services at the port. The Appellants claimed that they are covered under the category of Cargo Handling Service and exempted from Service Tax. The Department demanded the Service Tax under the category of port service. The ....
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....ed at minor port in Gujarat. The Appellants contended that there was no authorisation by the Port or other ports for rendering services and therefore, it would not come within the definition of port service. The Tribunal observed that Section 32(3) of GMB Act, 1981 provides for an authorisation from the port for performing specified services, thus, the same is to be considered for determining the liability to pay the Service Tax. There being no authorisation in favour of the Appellant, under Section 32(3) ibid in respect of services rendered by the appellant, cannot be said to be rendering any service which was authorized by port, which alone could be taxed under the head of Port Service at the relevant point of time. The Tribunal set-aside the adjudication order on merit and limitation. The relevant portion of the said decisions in the case of M/s Shreeji Shipping (supra), is reproduced below:- "12. The appellant had in the course of personal hearing brought on record an authorization issued by the GMB vide Notification No. GMB/T/12(25)/37-38/2007-16, dated 8-8-2007 in exercise of powers conferred under Section 32(3) of the GMB Act, 1980, authorizing M/s. Atash Nor Contro....
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....ose provided by a port or a person authorized by the port prior to 1-7-2010. .. . . . . . . 20. The ld. Counsel for the Revenue has contended that the decision of the Tribunal in the case of Velji Sons Pvt. Ltd., which was upheld by the Apex Court, cannot be relied upon as even though the service rendered by Velji & Sons were at a Minor Port the judgment had been rendered considering provisions of the Major Port Trusts Act. We have hereinabove reproduced provisions governing Major Ports & Minor Ports and find are pari materia insofar as the requirement for grant of an authorization is concern....
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.... dt.02.03.2004 to the President of Petitioner No.1 Association stated the service provided by the Member of Petitioner No.1 Association amounts to port service as defined in Section 65(105)(zn) of Finance Act, 1994 and they are liable to register themselves under Section 69 of the Act, 1984 and to pay tax accordingly. The Petitioners strongly relied upon the decision of the Tribunal in the case of M/s Homa Engineering Works (supra), which was over-ruled by Hon'ble High Court. The relevant portion in the case of Kandla Shipchandlers and Ship Repairers Association (supra) are reproduced below:- "10. It is not in dispute that the members of the petitioner-Association are authorized by the port authorities constituted under the Major Port Trusts Act, 1963 to provide such services. It is also not in dispute that without such authorization, such services could not be rendered by them. In fact, the petitioners have produced on record, a licence issued by port authorities authorizing the petitioners to provide such services. In that view of the matter, the question is whether the agencies involved in providing repair service to the vessel would or would not be covered within t....
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.... to the effect so as to carry out the repairing activity themselves. Understandably, the vessel which come on the port after sailing for a considerable period, would require minor/major repairing activities on account of the damages or mechanical faults incurred on account of vagaries of sea and for the subject purposes dry docks and workshops are established in the port for the purposes of rectifying the defect and to make the vessel seaworthy. However, extension of above facility does not mean that it is the duty of the Board to undertake the repairing activity themselves. In fact, under the said section, the port is required to provide facility for repair and not to undertake the repair itself. Ship breaking activities and ship manufacturing activities may also be done in the port area, for which purposes facility may be provided by the port, but that will not make the same as "port services"." The Tribunal was of the opinion that the term "any other services in respect of vessels" has to be extended to the services which are connected to the movement of the vessel. The Tribunal applied the principle of ejusdem generis. The view expressed by the Tribunal does not comman....
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....lusively required to perform under the Major Port Trust Act, 1963. The term in relation to in the definition of Port services, must be seen as to expanding the scope of coverage of the Port service and cannot be confined to those services which are in relation to movement of vessels so as to exclude from its ambit the work of repair of vessels. In that case, there is no doubt that the petitioners were authorized by the Port to perform the activities in the Port, which were not included the work of repair of vessels. In this context, the Hon'ble High Court observed that the work of repair of vessels would be treated as included in the authorization as per the wide scope of definition of Port service. In the present case, we find that the undisputed fact is the Appellant were not authorized by the Port to perform any activity. It is seen from the letter dt.24.08.2009 of the Chartered Accountant on behalf of the Gujarat Maritime Board to the Superintendent of Central Excise, DGCEI that the authorization has been issued only to M/s Essar Steel Ltd under Section 32(3) of Gujarat Maritime Board Act, 1981. The Adjudicating authority observed that in the written contract dt.01.04.200....
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.... in the case of Kandla Shipchandlers & Ship Repairers Association (supra) enlarged the scope of the definition of "Port Service" prior to 01.07.2010 to the extent the authorization need not necessarily be in respect of only those functions which the Board itself was required to perform under the Act. (Para 13.1 of the Judgment). The Hon'ble High Court categorically observed that the petitioners are authorized by the Port, which would include repair work of the vessels, even it may not be the function of the Board. It is already stated above that in the present case, there is no authorization in any manner to the Appellant, which is admitted by the Board. The point for consideration is that even there is no authorization by the Port in any manner, the service rendered by the Appellant would come under the Port Service. So, the submission of the learned Authorised Representative that the present case is covered by the decision of Kandla Shipchandlers & Ship Repairers Association (supra) is mis-reading of the said case law. In other words, the present case is covered by the earlier decision of the Tribunal in the case of Shreeji Shipping (supra). In that case also, there was no ....
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....s the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way." (b) Tata Chemicals Limited vs. Commissioner of Customs- 2015 (320) ELT 45 (SC) "In law equally the Tribunal ought to have realized that there can be no estoppel against law. If the law requires that something be done in a particular manner, it must be done in that manner, and if not done in that manner has no existence in the eye of law at all. The Customs Authorities are not absolved from following the law depending upon the acts of a particular assessee. Something that is illegal cannot convert itself into something legal by the act of a third person." The learned Authorised Representative contended that the Stevedoring and Lighterage charges as shown in the contract between M/s Essar Steel Ltd and GMB are similar to the contract between the Appellant and M/s Essar Steel. The Adjudicating authority observed that the Appellant admittedly informed GMB of the contract and arrangement between the Appellant and M/s Essar Steel and the argument that they were not authorized by the port,....
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....thing but cost of transportation. The relevant portion of the said decision is reproduced below :- "22. Learned counsel for the Revenue emphasized on Rule 9(2)(a) of the Rules in support of his contention that barging charges have also to be included in the value of the imported goods as they are also transportation charges. 23. On first impression the submission of learned counsel for the Revenue appears to be sound, because surely the transportation by barge is also part of the transportation of the goods. However, on a deeper analysis, we are of the opinion that the submission of the learned counsel of the Revenue is clearly untenable. Admittedly, all the contracts entered into with the foreign sellers are either CIF contracts or FOB contracts with Bills of Lading nominating Bombay/JNPT/Dharamtar as the ports of discharge. As such the cost of transport has already been included in the price paid to the seller under the CIF contract or an ascertainable freight determined and paid by the buyer from the foreign port to the Indian port. Hence, a further addition to the transport charges under Rule 9(2)(a) of the Customs Valuation Rules, 1988 is in our opinion clear....
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.... that the transportation of the goods from the mother vessel to the jetty and vice versa is not liable to tax. It has been observed that the activity of transshipment of import and export cargo from mother vessel to the jetty and vice versa is carried out by the barges (termed as Daughter Vessel) on account of draft not permitted the mother vessel to travel until the jetty at minor port. It is stated that first transportation of cargo from the mother vessel to the jetty is to be treated as continuation of journey of the goods in the import stream into India. The Tribunal in the case of United Shippers Ltd (supra) held as under:- "5.2 As regards the first issue, since the transaction involves a customs transaction and a service transaction, it is necessary to decide where the customs transaction ends and the service transaction begins. The issue as to what constitutes 'imports' has been settled by the Honble Apex Court in the case of Garden Silk Mills Ltd. (supra), wherein the Apex Court held as follows :- "Truly speaking, the imposition of import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the cu....
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....ods at the place of importation; and (c) the cost of insurance; Provided that - (i) where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods; (ii) the charges referred to in clause (b) shall be one per cent of the free on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c); (iii) where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods: Provided also that where the free on board value of the goods is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value of the goods plus cost ....
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.... heard Shri Mukul Rohatgi, learned Attorney General appearing for The appellant and carefully perused the material available on record. In our considered opinion, we do not see any good ground to interfere with the judgment and order passed by the Tribunal. Accordingly, the Civil Appeals are dismissed." The submission of the learned Authorised Representative is that the above judgment is without any reason. In the case of Kunhayammed Vs State of Kerala - 2001 (129) ELT 11 (SC), the Hon'ble Supreme Court held that where an appeal or revision is provided against an order passed by a court, Tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. The Hon'ble Supreme Court in the case of Medley Pharmaceuticals Ltd Vs CCE Daman 2011 (263) ELT 641 (SC), held that doctrine of merger applicable if appeal dismissed in the absence of detailed reasons or without reasons when superior Court upholds decision....
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....EZ status (i.e. prior to 20.10.2006) and after SEZ status, would qualify as Port service and whether the Service Tax will be leviable on their service. The learned Authorised Representative on behalf of the Revenue submitted that if there is no exemption notification under the Finance Act, 1994, the Appellant would be liable to pay the Service Tax. He relied upon the decision of Hon'ble Gujarat High Court in the case of M/s Essar Steel Ltd Vs UoI 2010 (249) ELT 3 (Guj.). On the other hand, the learned Advocate on behalf of the Appellant submits that by virtue of Section 26(1)(e) of the SEZ Act read with Rule 31 of the said Rules, there was exemption from levy of Service Tax on the taxable service provided to a developer or a unit to carry on the authorized operation in state. He relied upon the following decisions:- i) Reliance Ports and Terminals Ltd Vs CCE-2013-TIOL-1473-CESTAT-MUM ii) Intas Pharma Ltd Vs CST-2013-TIOL-1091-CESTAT-AHM iii) Tata Consultancy Services Ltd Vs CCE-2012-TIOL-1034-CESTAT-MUM We find that it has already been held that the demand of Service Tax on Stevedoring and Lighterage services on the Port service prior to 01....