TaxTMI 
TaxTMI 
2016 (4) TMI 156
X X X X Extracts X X X X
X X X X Extracts X X X X
....namely i) ITW India Ltd., Hyderabad ii) ITW India Ltd., Orissa These packers were engaged in Palletisation or packing of goods for the purpose of ease of transport. ITW India at Orissa was engaged in palletisation and marking of refractory bricks, ITW India at Vishakhapatnam was engaged in the strapping, marking and end cutting of the metal Coils. Both the activities were done within the factory of the client. It can be seen that there are in fact two different sets of facts and issues. In case of coal handlers the dispute is regarding classification of service under the Cargo Handling Service. In case of packers the dispute is regarding the alternate classification under packaging services and Cargo Handling Service. The coal handlers and packers filed following appeals before the Hon Supreme Court of India. S. No Appellant CA No Order appealed against Forum Reference 1 ITW India Ltd 6038-6039 of 2007 CESTAT (Kolkata) 2007 (8) STR 490 2 ITW India Ltd 1470-1474 of 2011 High Court of (AP) Order dated 14.3.2011 in CEA No. 49/2009, 15/2010, 18/2010, 20/2010 and 38/2010 3 Coal Carriers 5595-5596 of 2011 HC of Oriss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CESTAT, to constitute a larger Bench for deciding the issue involved. Since the matters have now become old, we would appreciate if the larger bench decides the matter within one year. Needless of mention the larger bench of the CESTAT shall decide all the issues involved. The appeals stand disposed of." The Hon'ble Supreme Court in it's order has observed as under: "two Benches of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') have taken a contrary view". Based on this observation Hon'ble Supreme Court further orders that "We accordingly, set aside both the orders and remit the cases back to the CESTAT with a request to the President, CESTAT, to constitute a larger Bench for deciding the issue involved." From the above directions it is clear that only two orders of the CESTAT which have taken contrary view have been set aside and remitted to the larger bench of CESTAT. However it is noticed that in the case of coal handlers, CESTAT order has been upheld by Hon High Court of AP. In the case of packers there are order of Tribunal and of Hon High Court of AP, taking contrary stand. The disputes involved are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....read with Section 73 of the Finance Act, 1994 along with interest under Section 75 of the Act also imposed penalty of Rs. 500/- under Section 75A of the Act. 24. The aforesaid findings of the First Appellate Authority exercising appellate jurisdiction and power by recording his reasons were examined by the CESTAT in the Second Appeal. The CESTAT in its concurrent finding of fact with reference to the grounds urged and considering the relevant law placed by the parties held that the order impugned in the appeal does not call for any interference. However, penalty is set aside holding that there is no intention on the part of the appellant to suppress the payment of service tax to the Revenue. Therefore, that portion of the order is set aside. After carefully examining the correctness of the findings we are of the view that the grounds urged in respect of the first question is not tenable in law and the same is liable to be rejected. The Hon High Court had upheld the decision of the Tribunal reported in 2009 (13) STR 138 (Tri-Kolkata) . Tribunal in that case had observed as under: 15. Combined reading of provisions of section 65(105)(zr) and 65(23) of the Act throw lig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of transport is irrelevant for incidence of levy once the service provided meets the test of handling of cargo in the manner envisaged by law. It is also not necessary that the cargo should only be meant for transport either by vessel in ships or aircrafts. 17. It was noticed from the agreement of the parties that time was essence of the contract. The nature of activity that was carried by the Appellants was to load the cargo i.e. coal in the Railway wagons. Such an activity squarely falls under the definition of cargo handling service provided by Section 65 (23) read with Section 65 (105) of the Finance Act, 1944 and brings the appellants to the fold of law for such service provided. Accordingly we decline to intervene to the orders passed by the Ld. First Appellate Authority except in the matter of penalty which we consider not imposable on the facts and circumstances of the case. We intervene to the Revisional order involved in Appeal case No. 41/06 and waive entire penalty imposed finding no justification of imposition since there was no willful suppression. We noticed that the appellants had no intention to cause evasion of revenue but at the infancy stage of implementati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd. case (supra) wherein also the issue related to classification of service in respect of loading of coal on tippers by hiring pay-loaders and transporting from one place to another within the mining area. After considering the various decisions including those involved in the Modi Construction Co. and Sainik Mining & Allied Services Ltd. (supra), this Tribunal came to the conclusion that the said activity would fall within the purview of "Cargo Handling Service" and leviable to service tax accordingly. However, the Tribunal in the said case held that as there was a confusion as regards the taxability of the activity, the demand should be restricted to the normal period of limitation and extended period of time could not be invoked. The same ratio was followed by this Tribunal in the case of Gayatri Carriers Pvt. Ltd. wherein also the question for consideration was handling of coal in the mining area belonging to South Eastern Coal Ltd. prior to 01/06/2001. Following the ratio in Gangadhar Bulk Movers Pvt. Ltd. case (supra) this Tribunal again took the view that the activity of loading and unloading of coal in the mining area would come within the purview of "Cargo Handling Servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The appeal is disposed of in the above terms. It is seen that all the cases involving handling of coal in the collieries have been decided in favor of revenue on common grounds by holding the services to be classifiable as cargo handling services and there was no contrary view. In case of three of the appellants (handling coal in the mines), the decision has been taken by the Hon'ble High Court of Orissa and in two cases of the coal handlers, the decision has been taken by the Tribunal relying on the decision of Hon'ble High Court of Orissa. From the above orders it is clear that in case of coal handlers listed as A(i) to A(v) in first para there is no contrary view. All the orders are aligned to the views expressed by the Hon'ble High Court of Orissa order dated 25.2.2011. 3. It is noticed that incase of decisions in respect of Packers, namely ITW India Ltd two contrary orders were passed by CESTAT. In one case the Hon High Court of AP has upheld the order of CESTAT. Therefore, in case of packers, there were two orders before the Hon Supreme Court, one of Hon High Court of AP and another of Tribunal (Kolkata). i) In case of ITW INDIA LTD. The Kolkata bench o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aft. In the instant case, the service provided by the petitioner Firm under the contract is distinct i.e. transporting coal from wagons to Thermal Power Station by conveyor belt and not by any means of transportation. Thus, we are of the view that the service rendered by the petitioner under the subject contract does not fall under the ambit of Cargo Handling Services and as such it is not liable to pay the service tax. 5.3 The Learned Advocate states that in the case decided by the Hon'ble Rajasthan High Court, the coal was initially carried by railway wagon to the rail head and then to the site of Thermal Power Station with the help of wagon tippling system to be fed in the boiler bunkers through conveyor system. He states that since in that case, the Hon'ble High Court has held that the activity was not coming under the scope of cargo handling service, in the present case though the goods packed by the Appellants are to be moved by transport subsequently, the same should not be covered under the cargo handling service. With great respect, we note that the Hon'ble Rajasthan High Court has considered un-loading of the coal by the wagon tippling system and thereafter....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... required to be excluded from the ambit of levy of service tax. We find merit in this submission of the Learned Advocate. 5.6 The Learned Advocate also states that since the issue involved relates to classification of the impugned service, imposition of penalty on the Appellants is not justified. Considering the fact that the levy on cargo handling service was a new tax, we are of the view that a lenient consideration in regard to imposition of penalty is called for. 5.7 In view of our findings as above, we hold that the activities of the Appellants is taxable as cargo handling service. However, we set aside the impugned orders and remand the matter to the original authority for the limited purpose of excluding the cargo handling service provided by the Appellant in respect of export cargo and for re-determining the tax payable thereafter. As regards the penalties imposed, we take a lenient view and set aside the same. All the three Appeals are disposed off in the above terms. The Cross Objection also stands disposed of. ii) In case of ITW INDIA Ltd. the Bangalore bench of tribunal passed an order in respect of five appeals. The said order was upheld by Hon High Court of A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd after they become cargo, the appellants do not handle the same which is what is required in the terms of the definition. It was also stated that the Tribunal has not considered that the appellants do not undertake transportation of the cargo which is the test laid down by the Rajasthan High Court in the case of S.B. Construction Company Vs. U.O.I. [2006 (4) STR 545 (Raj.)] . In fact the Tribunal notes that the goods are packed for transport but fails to examine that the next activity of transportation is also required to be done by a cargo handling agency. The Tribunal has not given any finding whether the appellants are specifically covered under the packing service which has come into effect from 16.6.2005 and how the appellants could be covered for the same activity under two different categories. It was further submitted that the same Bench of Kolkata Tribunal in the matter of M/s B.K. Thakkar Vs. CCE & Cus, Bhubaneshwar 2008-TIOL-148-CESTAT-KOL has taken a different view in respect of the activities of loading and unloading of iron ore. 8. It was also urged that with effect from 16 June 2005, the appellant is paying service tax under the packaging service. The packaging ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. The different Adjudicating officers took different view and there was existence of several view points. In these circumstances, as the matter is one of interpretation, it cannot be alleged that the appellant suppressed any facts. Therefore the longer period also cannot be invoked. Hence, we do not find any merit in the impugned order which demands service tax on the activity of the appellant under the category of 'cargo handling service'. Therefore it is not correct also to adjust the amount, paid under the category of 'Business Auxiliary Service' for the period prior to 16th June 2005. We also find that the Commissioner has included the value of the export cargo in the demand that is also not correct. As the service tax itself is not payable under the category of 'cargo handling service', no interest can be demanded and penalty imposed is also not justifiable. In the above circumstances, we have no other option but to allow the appeals. Thus these three appeals are allowed with consequential relief. ___ Service Tax Appeal No.99/2007 & 110/2007 22. On a very careful consideration of the entire issue, we find that the party was doing 'packagin....