TaxTMI 
TaxTMI 
2023 (9) TMI 921
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....ense to the appellant authorizing them to ply these tugs/ barges to carry out different activities within the port area. The said income mentioned above i.e. tug/barge income is for services rendered by the Appellant in the form of transportation 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, tran....
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....ense under Rule 7 of Licensing of Harbour Craft Rules, 1986 from Gujarat Maritime Board (GMB). The said licenses were issued for specific barges for plying within the limit of ports being controlled, managed and administered by GMB for transportation 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(....
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....ing services as authorized persons by the Port. It is independent entity. Thus, the services provided by appellant are not covered by the Port Services. 2.5 Without prejudice, he also submits that though it was not authorized by GMB to perform services in relation 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 Se....
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....utput services within the meaning of definition of 'Input' under Rule 2(k)(ii) of the Cenvat Credit Rules, 2004. The above submission also gets weightage from the clarification issued by the CBEC vide letter F.No. 137/120/2008-CX 4 dated 23.10.2008 2.8 He also 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 o....
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....or other port, in any manner.' From above definitions of 'Port Service' before the amendment of 1-7-2010 and after the said amendment of 1-7-2010, We find that prior to 1-7-2010 focus/emphasis was on any service rendered by a port or other port or any person authorised by said port 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, Ban....
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....nt to conduct the services on his behalf. Licenses issued by the Port authorities cannot be considered as authorization. Such licenses are issued by the Port authorities to all the persons working in the Port to ensure the safety and security of the Port Area and does not confer any power or authority 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....
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....ght of the foregoing discussions and applying the ratio of law declared by the Tribunal in the case of Homa Engineering Works (supra), we are of firm view that activities undertaken by the appellant does not fall under the category of Port Services." 16.2 Revenue, aggrieved by such an order, preferred 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 ra....
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....de by the Finance Act, 2010 is prospective and is effective after 1-7-2010 only. The services rendered within the 'Port area', which is subject matter of the present appeal and services rendered within 'airport premises' are comparable. Therefore, findings and the conclusion made by Hon'ble Delhi High Court in the said case are relevant 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 au....
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....ed by the Central Government for the purposes of this Act by notification in the Official Gazette, and, until a notification is so issued, within such limits as may have been defined by the Central Government under the provisions of the Indian Ports Act; (z) "vessel" includes anything made for the conveyance, mainly by water, of human beings or of goods and a caisson; 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 a....
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....etween the Board and the person concerned. Section 42. - Performance of service by Board or other person. (1) A Board shall have power to undertake the following services - (a) landing, shipping or transshipping 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 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 Gove....
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....pping of passengers or goods between vessels in the port or port approaches; (b) landing and shipping of passengers or goods from or to such vessels to or from any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or building in the possession or occupation of the Board or at any place within the limits of the port or port approaches, (c) carnage or porterage of goods on any such place; (d) wharfage, storage or demurrage of goods on any such place; (e) any other service in respect 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 ....
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....t the appellant had wrongly availed the input Cenvat credit on various goods viz. steel plates, steel sheets, angle ,etc. on the ground that the goods i.e. various inputs , on which the service provider has availed the credit, were not inputs for the service provider. In facts the aforesaid goods were used for repairing the vessels/barges and therefore can be said that the said goods/inputs have directly been used for providing output service as provided in terms of Rule 2(k)(iii). The submission of appellant is that steel plates, HR pates, angle etc. purchased by them were 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....
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....ved that the assessee could not provide storage and warehousing services without constructing by cement and steel and the Central Excise duty was paid on these items. The Hon'ble High Court, on plain reading of definition of input and input services under Rule 2(k) and 2(l) of the said Rules, observed that both the definitions would show that unless excluded all goods used in relation to manufacture of final products or for any other purpose used by a provider of taxable service for providing an output service are eligible for Cenvat credit. The present case relates to output service provider. 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 ....