‘Cargo Handling Service’ being incidental service, service tax not leviable on storage of import cargo

Seabird Marine Services Pvt Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)

Facts- These appeals are filed by the M/s Seabird Marine Services Pvt. Ltd., Mundra International Container Terminal Pvt. Ltd., Allcargo Logistic Ltd., and Honeycomb Logistics Pvt. Ltd. against demand of Service Tax on “Storage and Warehousing services” allegedly provided by the appellant’s, demand of interest and imposition of penalties.

It is alleged that the Appellant artificially split charges into two categories viz. “Storage and Warehousing Services” and “Cargo Handling Service” for handling of export cargo by claiming the benefit of specific exclusion in the definition of “Cargo Handling Service”. The impugned order held that the Appellant paid service tax under category of “Storage and Warehousing Services” in the case of storage of import cargo and did not pay service tax by classifying it under category of “Cargo Handling Service” even though the nature of services rendered in respect of import and export was identical.

Conclusion- The Circular No.104/7/2008-ST dated 06.08.2008 issued by CBEC clarified that transportation is not an essential character of “Cargo Handling Services” but only incidental to “Cargo Handling Services”.

In view of above the arguments in the impugned orders that only the “Cargo Handling Services” provided in respect of transportation of goods would be classifiable as “Cargo Handling Services” is misplaced and liable to be rejected.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

These appeals are filed by the M/s Seabird Marine Services Pvt. Ltd., Mundra International Container Terminal Pvt. Ltd., Allcargo Logistic Ltd., and Honeycomb Logistics Pvt. Ltd. against demand of Service Tax on “Storage and Warehousing services” allegedly provided by the appellant’s, demand of interest and imposition of penalties. The details of the cases are as follows:

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 Department at the relevant time and having service tax registration under the category of “Cargo Handling Service”, “Storage and Warehousing Service” and “Renting of immoveable properties”. The Appellant provided two separate services falling under the taxable head “storage and warehousing service” and “Cargo Handling Services” and were receiving separate consideration for the two separate services provided by them as per their Tariff Card. The Tariff Card for export and import cargo/container was separate and it specified separate charges for “cargo handling” and for “storage warehousing services.”

2.3 Learned Counsel stated that appellant is engaged in handling of export cargo which included the activity of carting of cargo from the trucks into the CFS Storage Area, Destuffing/removing of cargo from Trucks and transporting it to the warehouse and placing of empty containers for stuffing, seizing and transporting the laden containers from CFS to Port. Learned Counsel argued that these activities were in nature of cargo handling and were being classified by them under the taxable head “Cargo Handling Service”.

2.4 Learned Counsel Stated that the handling of export cargo in the CFS is initiated when the Custom House Agent (hereinafter referred to “CHA”) or the exporter approaches the Appellant for carting the cargo into their CFS. The Appellant requires the CHA/ exporter to fill the Cargo Carting Form containing details of cargo type, cargo weight, quantity etc. & submit the same to the Appellant along with the Shipping Bill. Once the export cargo reaches the CFS, the Appellant engages a Handling and Transport Contractor (hereinafter referred to as “H&T Contractor) to undertake the Cargo Carting process. This process involves de-stuffing/ removing of cargo from trucks and carrying/transporting it to the CFS’s warehouse. At the time of carting the cargo, a tally is prepared by the surveyor staff (contractor of the Appellants), which includes examination of physical cargo and tallying the quantity with the Shipping Bill and Cargo Carting Form. The H& T Contractor raises a bill on the Appellant for the Handling of Cargo services provided by them. However, as the services are provided in relation to handling of export cargo, no service tax is charged by them. At the end of the carting process, the cargo is stored inside the warehouse. Storage of export cargo is 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 at the CFS yard till it is moved to the Port terminal. Storage of Containers are also charged based on per ton/ per day basis as provided in the Tariff Card. For the consideration received towards storage of Containers, the Appellants were duly paying service tax under the taxable head “storage and warehousing services”. When the CHA requires the goods move out of the CFS and be delivered to the Terminal, they submit a request to the Appellants for movement of containers through “Container Movement Request Form” for handling and delivering the Containers to the Terminal. The movement of goods from the CFS to the Terminal was undertaken by the Appellants’ designated transport contractor. The transport contractor raised a Bill on the Appellants for the GTA services provided by them. On these services, the Appellants were paying service tax under GTA on reverse charge basis. The Appellant thereafter raised a consolidated invoice on their customer, charging separately for “Cargo Handling Services” and “storage and warehouse services”. While carting of cargo truck CFS storage area, and stuffing, sealing and transportation of container from Port provided by H& T Contractor was charged separately under “cargo handling services”, the storage and warehousing export cargo export container was charged under “storage and warehousing services”. The Appellant was duly discharging service tax on “storage and warehousing services” and there is no dispute respect to that. However, as handling export cargo was from under the definition of “cargo handling services”, the Appellant was not paying service tax on consideration received towards handling of Export Cargo. The appellant submits that they were correctly classifying the activities carting of from truck to CFS storage area, and transportation of container the CFS to the port under the taxable head “cargo handling services” and GTA Services. 2.7 The Learned Counsel argued that the impugned order classified the above Service under “Storage and Warehousing in following grounds:

(i) Services of Handling cargo provided the Appellant are in relation services of storing & warehousing during import and export. The said cargo handling activity carried out by the Appellant was considered by the Respondent as an integral part of the “warehousing and storage” services provided by them in the CFS area and therefore, chargeable 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 Warehousing Services” in the case of storage of imported cargo but in the case of storage of export cargo, they did not pay service tax by classifying the same under the category of “Cargo Handling Service” even though the nature of services rendered for Import and export were identical.

2.8 Learned Counsel argued that the Revenue invoked larger period of limitation on the premise that there was no ambiguity in the relevant provisions on the Act/Rules and the Appellant acted in conscious disregard tax obligation and acted deliberately in offence of the act with sole intend to evade payment of service tax.

2.9. Learned Counsel stated that “Cargo Handling Service” was liable to be taxed first time by Finance Act, 2002. Learned Counsel stated that at the time of introduction of entry, Central Board of Excise and Service Tax issued a Circular F. No. B11/1/2002-TRU dated 01.08.2002 wherein it was clarified as under:

“Cargo handling service”

“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 produce” is given under the storage and warehousing service) or for goods meant to be stored in cold storage have been exempted from the levy of service tax. (See Notification No. 10/2002 S.T.).

4  A point has been raised as to what would be the value of service tax in a case where transport and cargo handing service is provided in a composite manner. The measure of tax is the gross amount charged by the cargo handling agency from the customer. 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 charges and raises the bill to the customers. For warehousing they raise a separate bill. The question is whether CWC is liable to pay service tax on cargo handling services and if so, whether they can take credit of the tax paid on cargo handling services by the H&T contractor. Similar situations may exist in respect of other storage and warehouse 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 Day 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 lability on cargo handling services provided here a separate bill for the same to his client. In other words, he cannot adjust the credit against storage and warehousing service charges.”

2.9 Learned Counsel Argued that the above clarification provided by the Board specifies that activities undertaken by the Appellant “Container Freight Station” fall under the category of “Cargo Handling Services”. The Respondent erred in placing reliance upon the above circular to consider activities of the Appellant under the category of “Storage and Warehousing Services”, particularly when both services were introduced by Finance Act, 2002 and the Board clarified the scope of both the services.

2.10 Learned Counsel argued that the Identical situation arose in the following cases wherein after clarifying the detailed activities undertaken by the Assessee, it was held that services provided by the assessee fall under the category of “Cargo Handling Service”:

• Airport Authority of India Vs. Commissioner of Service Tax – 2017 (3) GSTL 390 (Tri. Del.)
• Kerala State Industrial Enterprises Ltd. Vs. C.C.E, C. & S.T 2012 (28) STR 574 (Ker.)
• S. Transport Vs Commissioner of Central Excise, – 2010 (17) STR 21 (Tri. Kolkata)
• (iv)Gajanand Agarwal Vs. Commissioner of Central Excise -2009 (13) STR 138 (Tri. Kolkata)

2.11 Learned Counsel argued that the Revenue erred in holding in Para 8 of the impugned order that services of “Cargo Handling Service” provided in CFS are classifiable under “Cargo Handling Service” only when it is provided in the context of transportation and when it is incidental 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 otiose, which could never have been the intention of the Legislature.

2.14 Learned Counsel argued that the Revenue ought to have appreciated that the activities of carting of cargo from truck Into CFS storage area, and stuffing sealing and transportation of Container from CFS to Port were undertaken in relation to export cargo-and therefore excluded under the definition. Revenue failed to appreciate that similar activities undertaken in relation to import cargo had also been classified under “cargo handling services and the Appellant had paid appropriate service tax on the same, which had been accepted-by the Department.

2.15 Learned Counsel argued that the Revenue ought to have appreciated that the fact that the Department had accepted service tax in respect of the Import cargo under the taxing entry of “Cargo Handling Services was an acceptance by the Department of the fact that the aforesaid activities of the Appellants were more appropriately classifiable under “Cargo Handling Services”.

2.16 Learned Counsel argued that the Revenue ought to have appreciated that when there was a specific exclusion in relation to handling of export cargo, then that exclusion had to be given effect to, as it was the intention of the Legislature to grant benefit to all exporters, so as to enable the exporters to reduce their tax burden and remain competitive in the international market. In support of the above submission, the Appellants had relied on a decision of this Hon’ble Tribunal in the case of Dr. Lal Path Lab (P) Ltd. V/s Commissioner of C.Ex.- 2006 (4) STR 527 as upheld by the Hon’ble High Court in 2007 (8) STR 337.

2.17 Learned Counsel argued that the definition of storage and warehousing services was restricted to the act of storing and warehousing the goods and could not extend to the activities of handling of export cargo. It covered only storage and warehousing of goods and did not cover handling or transporting of cargo/container. The definition could not be read to cover handling of export cargo which was specifically covered under the definition of cargo handling services. The services rendered in the nature of loading, unloading and packing of export/import cargo/ container specifically covered under cargo handling services, and they were correctly classified by the Appellants under Cargo Handling services.

2.18 Learned Counsel stated 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 penalty on the Appellants did not arise. The Appellants had acted bonafide at all times and had not contravened the law.

2.20 Learned Counsel argued that this was a fit case for waiver of penalty under Section 80 of the said Act as under Section 80, there is a discretion not to impose any penalty on “reasonable cause.

2.21 Learned Counsel stated that the Appellants had presented sufficient ,material before the Commissioner so as to be eligible to the benefit of Section 80 of the said Act.

2.22 Learned Counsel argued that without prejudice to the submissions made on merit of the case, the principles of valuation provided under Section 67 of the Act, the benefit of cum Duty price ought to be granted to the Appellant. The Appellant relies upon the following decisions wherein the benefit of cum-duty value has been extended:

• Sri Chakra Tyres Vs. CCE (Madras) reported in 1999 (108) ELT 361.
• Rohit Detective & Security Agency vs. C.C.Ex 2009 (14) STR 689 (T)
• Gem Star Enterprises (P) Ltd. Vs. CCE, 2007 (7) STR 342.

3. Learned AR for the Mundra International Container Terminal Pvt. Ltd. also pointed out that they charged for various services rendered by the according to tariff published by them from time to time. Learned Counsel argued that they have charged Service Tax in all services except for Cargo Handling services provided in respect of the export cargo. Learned Counsel took us through the invoices issued by them for stuffing of export Cargo to show that they have not charged any service tax on the said activity relating to export. Similarly, he took us through few invoices for destuffing of import Cargo, wherein they have charged Service Tax as per applicable rates. He also showed few invoices for Storage of Cargo for the purpose of export wherein they have charged Service Tax at the applicable rate. Learned Counsel adopted the arguments made by the learned Counsel in the case of Seabird Marine Service Pvt. Ltd. He asserted that the activities under taken by the appellant in respect of which demand has been raise are not “Storage and Warehousing Services” but Cargo Handling Services. Learned Counsel relied on para 3 under the head of “Cargo Handling Services” of the CBEC Circular No. B/11/1/2002-TRU dated 01.08.2002 (supra).

3.1 He argued that even as per CBEC circular also Service provided by Container Freight Station is in the nature 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 cargo, the same cannot be imagined without having storage facility. The storage tank were an essential, integral and, in fact, the core of the port and it is in-conceivable for port of such a nature to exist and operate without having these tanks, which are located within the area notified as a port. As I have already observed that such storage facilities were part of the project report and was a basic requirement of the same. It cannot be said that such storing and warehousing was an additional job being done by the appellant. The same was an integral part of the port service and cannot be held separately liable to tax as storing and warehousing service.

28. I may here examine the scope of storage and warehousing services. The relevant sections are reproduced below for better appreciation.

“(102) “Storage and warehousing” includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage or agricultural produce or any service provided by a cold storage.

65(105) “taxable service” means any service provided, (zza) to any person, by a storage and warehouse keeper in relation to storage and warehousing service.”

A plain reading of the above definition shows that the storage and warehousing services must be provided by the storage and warehousing keeper in relation to the storage and warehousing of the goods. The person should be known as storage and warehousing keeper in the common parlance and anybody would be free to engage such provider for the services of storage and warehousing. In other sense, it should be open to any person to approach the keeper for the purposes of storage and warehousing. In the present case, no storage and warehousing services are provided to the public at large and the same are exclusively meant for exporters and importers who use the port facilities. Taking an example from common life, if a person is rendering a paying guest accommodation and also provides food to the resident, can that person be held to be providing the services of Restaurant, when such food providing is only restricted to the paying guest and not to any independent person, who can come at any point of time and enjoy the food facility. Similarly, if a hotel provides services of washing and ironing of clothes to its resident guests, can it be called as a laundry or a dry-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. 1-7­03 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 Distributing 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 extraction services for construction, geophysical, geological or similar purposes; or

(ii) Soil stabilization; or

(iii) Horizontal drilling for the passage of cables or drain pipes; or

(iv) Land reclamation work; or

(v) Contaminated top soil stripping work; or

(vi) Demolition and wrecking of building, structure or road,

But does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies”.

“Section 65 (105)(zzza) – to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other similar activities”.

“Section 65 (105)(zzzy) – to any person, by any other person in relation to mining of mineral, oil or gas;”

We note that activity undertaken by the appellants is excavation and removal of O/B waste and mining of ore. We also note that there is only one contract with the appellants showing the scope of work as excavation and removal of O/B waste and mining of ore. This activity starts from excavation and ends at mining of ore. We find that this is a composite activity and cannot be split into two separate parts for levy of service tax. We are supported in taking this view by the decision of Tribunal in case of M. Ramakrishna Reddy v. CCE reported in 2009 (13)  S.T.R. 661 (Tri.-Bang.) wherein it was held that removal of over burden and excavation of ore is undertaken for mining of ores only and activity does not fall under Site Formation and Excavation and Earth moving and Demolition service. Following the said decision, we hold that since the activity undertaken by the appellants is also excavation and removal of over burden and mining of ore, it is not classifiable under Site Formation, Cleaning, Excavation, Earthmoving and Demolition services.”

3.4 The Learned Counsels for M/s Allcargo Logistic P. Ltd. & Honeycomb Logistic P.Ltd. stated that he was registered centrally in Mumbai with effect from 01.04.2011 and therefore the Authorities in Rajkot did not have jurisdiction for the issue show cause notice for the period of 01.04.2011. Learned AR for the revenue relied on the impugned orders.

3.5 Learned AR argued that M/s HoneyComb Logistics Pvt. Ltd (Appeal No. ST/11582/2015)have submitted Tariff Card. On 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) G.S.T.L. 409 (Tri. – Ahmd.)

3.7 Learned AR also Stated that Storage of Empty container may be used either for export or import and these charges are collected from the container lines/owners and not from the individual importer/exporter, therefore charges for storing empty containers are liable for service tax. Further, reason for storing empty containers in CFS is very clear. As and when the importer/ exporter ask for “container for export or import, container line would direct the importer/exporter to lift the empty container stored/warehoused in CFS and CFS is charging container lifting charges from importer/exporter and thus in respect of storage of empty containers, the appellants provides sheer Storage and warehouse’ service and therefore the same. is liable for service tax under’ Storage and Warehouse’ service.

3.8 Learned AR relied on Circular No.B11/1/2202-TRU dated 01.08.2002 wherein it is specifically mentioned that “handling of empty containers cannot be treated as ‘cargo’ and therefore, such activities do not come within the purview of the cargo handling service. Further, vide Circular No. 96/7/2007-ST dated 23.08.2007 have clarified that ’empty containers are covered within the meaning of ‘goods’ and thus, service provided in relation to storage and warehousing of empty containers is liable for service tax under storage and warehousing service.

3.9 Learned AR argued that Appellant’s are collecting the charges for storage and warehousing in respect of import consignment and paying the service tax under ‘Storage & Warehouse Service’ Category whereas in export, the all the activities as claimed as cargo handling are done i.e. transportation, carting, de-stuffing, loading/unloading, storage and warehousing etc. however not paying service tax on storage and warehousing facility is not acceptable.

3.10 Learned AR argued that the service of Storage & Warehousing’ cannot be termed as ancillary to cargo handling services as the appellant have earned the considerable revenue from the storage and warehousing facility. Apart from these, in global trading, the export goods purchased from nearer to CFS, or considering the affordability/viability of costing of storage and warehouse, the exporters, intentionally avail the storage and warehousing’ services inspite of knowing that there would be charged 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 provided in their CFS for the purpose of “Cargo Handling” and “Storage and Warehousing”. All the appellant’s are container freight station Circular No.18/2009-Customs dated 08 June, 2009 prescribed as under:

“2.3 Section8 of the said Act provides that the Commissioner of Customs may approve the landing places for unloading and loading of goods [clause (a)] and specify the limits of the customs area [clause (b)] within a notifies customs port or customs airport or any other category of customs station. Container Freight Stations are specified as customs areas under Clause (b) of the said Section 8 wherein  imported goods or export goods are ordinarily kept before  clearance by customs. With the increase in volume of international trade and the bottlenecks/lack of sufficient infrastructure at the port, a number of CFSs have been developed around the seaports over the years.”

Chapter 23 of the Custom Manual related to setting up of ICD/CFS prescribed as follows:

‘2.An Inland Container Depot (ICD)/ Container Freight Station (CFS) may be defined as:-

‘A common user facility with public authority status equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under Customs transit by any applicable mode of transport placed under Customs control. All the activities related to clearance of goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export, transshipment, take place from such stations.”

From the above it is apparent that the Custom fright station are established essentially to handling imports/ Exports cargo and for temporary storage of cargo or loaded/ empty containers. Cargo Handling Services was introduced in the Service Tax net in the year 2002 and Circular No. B11/1/2002-TRU dated 01-August, 2002, clarified as follows:

“2. As per clause (21), the term “cargo handling service” means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and any other service incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation 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 produce” is given under the storage and warehousing service) or for goods meant to be stored in cold storage have been exempted from the levy of service tax. (See Notification No. 10/2002-S.T.).

4. A point has been raised as to what would be the value of service tax in a case where transport and cargo handling service is provided in a composite manner. The measure of tax is the gross amount charged by the cargo handling agency from the customer. 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 actual basis(verifiable by documentary evidence),  then the tax would be leviable only on the cargo handling charges.

11. Another point raised relates to cases where the CFS offers a total packages rate, which includes transportation and handling in respect of imported laden containers from Port to CFS. The question is if the cost of transportation is shown separately in the bill raised will it be excluded from the levy of service tax. If the cost of transportation is claimed on actual basis, then it will not be includible in the taxable  value of cargo handling services.

14. CFS also sometimes undertake storing/washing/repairing and handling of empty containers for the shipping lines for which they charge the shipping lines. Empty containers cannot be treated as cargo. Therefore, the activities mentioned above do not come within the purview of cargo handling services.”

4.1 In the same year storage and Warehousing Services were also included the Service Tax net the aforesaid circular dated 01.08.2002 clarified as follows in respect of “Storage and Warehousing Services”.

“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 charges and raises the bill to the customers. For warehousing they raise a separate bill. The question is whether CWC is liable to pay service tax on cargo handling services and if so, whether they can take credit of the tax paid on cargo handling services by the H&T contractor. Similar situations may exist in respect of other storage and warehouse 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 levy of Service Tax under the Cargo Handling Services, and such services will be tax under transportation service.

4.2 The facts of the case are that the appellant’s are container freight station. The appellant’s are providing services on the basis of a tariff card. There are standard packages which involved the complete service of container freight station (including storage for a specified limited time) at a particular rate. All the appellant’s are paying service tax on such services in case of import of goods. All CFS are not paying service tax on such services in respect of export of goods being net covered in service tax net.

4.3 All appellant’s are charging a “Storage and Warehousing” fees only in case the cargo stays in CFS beyond the period included in such package rates given in tariff cards. In those circumstances for charges for 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.

4.4 In this regard the decision of Hon’ble High Court of Kerala in the case of Kerala State Industrial Enterprise Ltd.Vs. CCE, C. & S.T- 2012 (28) STR 574 (Ker.) became is relevant. In para 6 of the said decisions following as observed:

“6.After hearing both sides and after going through the orders and records of the case, what we find is that the department has not conducted any enquiry as to whether appellant is charging varying rates for the same cargo depending on the period of retention of the goods, whatever be the reason, in their terminal. If appellant charges the same rates for the goods lifted after arrival in the terminal building after all processing and on completion of all formalities, i.e. within 48 hours, then there is no scope for levy of any service tax on the ground of storage and warehousing because appellant is not charging for the same. On the other hand if appellant charges more than the normal tariff of terminal charges on account of delay in lifting the goods within the cut off period of 48 hours, then such charges over the normal rates are certainly attributable for storage and safe custody of goods which squarely falls within the scope of Section 65(102) of the Act. Unfortunately none 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 finding that additional charges if any levied over standard rates for handling and clearance of goods within 48 hours can be treated as charges attributable to storage and warehousing and tax can be levied thereon. The matter is remanded for conducting enquiry and for levying service tax, if any payable on any part of the charges collected, after issuing notice to the appellant and after hearing the appellant. Since the appellant‘s is not the unique business but identical business would be carried on by other agencies in International Airports, it is for the department to collect details from the Commissioners outside Kerala and to take a uniform pattern for levy. Before parting with the matter we hold that even if the appellant is found to be liable for payment of part of the handling charges as attributable to storage and warehousing charges following our judgment above, there is no scope for levy of penalty as no contumacious conduct can be presumed in the matter. So much so, penalty in any case will stand vacated. So far as dispute raised on the levy of tax on X-raying charges is concerned, the appellant has conceded the issue in favour of the department and the appeals on that issue will stand dismissed.”

From the above it is clear 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.

4.5 Similar view has been taken by tribunal in the case of Airport Authority of India Vs. Commissioner of Service Tax-2017 (3) GSTL 390(Tri. Del.) wherein para 5. The following has been observed:

“5. We have heard both the sides and perused the appeal records. On the first issue whether the appellants were engaged in providing taxable service under “storage and warehousing”, we note that based on the submissions made and the findings recorded in the impugned order, that the appellants are basically engaged in various composite activities starting from receipt, shifting, handling, loading, packaging in suitable manner, security X-ray, scanning and loading of cargo for outward movement by aircraft. These activities 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 9-9­2004.

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. The claim of the appellant is that ^„cargo handling service‟ is more specific than ^„airport service‟. We are not in agreement with such proposition. While cargo handling may be specific with reference to services rendered in connection with cargo, ^„airport service‟ is also specific to the extent that this service can be rendered only by airport authority or any other person in a designated airport or a civil enclave. The service is area specific. As such, we are not in agreement that this is a general category of tax entry. On careful consideration of the submission made by the appellant, we are of the opinion that the services rendered by the appellant are taxable under the category airport service w.e.f. 10-9­2004.”

From the above decision it is clear that if a composite all inclusive rate is charged for handling of cargo from receipt of cargo in the premises of CFS to the clearance upto the port then all the activities undertaken like Loading, Unloading,Warehouseing, Stuffing,transport,destuffing, etc. the same could be covered under the category of “cargo handling services”. Since service of Cargo Handling for the export cargo is not taxable, no tax can be levied on such services. However, if during this process of export certain charges are recovered for the purpose of storage beyond the period included in the composite package rate then such amounts would be chargeable to service tax under the Storage Warehousing services. Similarly, if any transportation is done by vendors for the purpose of moment of containers of cargo from port to CFS or otherwise then such transportation would be liable to Service Tax on reverse charge basis under GTA service.

4.6 The order impugned in case of M/s Mundra international Container Terminal Pvt. Ltd. observes as follows:

“7. In this regard, I find that as contended by the Notice; to impress on the activity carried out by the Noticee, I reiterate the contention of the Noticee that; stuffing of goods includes carting of cargo from truck into CFS area, lift on and off of empty containers, transportation within the CFS area and stuffing point, lift on and off of full container from stuffing point to CFS stack and from there to terminal yard. The said activities are all handling of cargo undertaken in the CFS in relation to storage and warehousing services. The said services are services incidental to their service 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 storage and warehousing services provided by them in their CFS area and in order to escape service tax they had wrongly classified their activity of handing of cargo provided by them in relation to the storage and warehousing of expert cargo under the category “Cargo Handling Services” to wrongly avail the benefit of exemption available for expert cargo and accordingly paying service tax in the case of import. Cargo Further, the Board Vide circular No.96/7/2007-ST dated 23.08.2007 as amended by circular No.98/1/2008-87 dated 04.01.2008 has clarified that services provided in relation to storage and warehousing of empty containers liable to service tax under Storage and Warehousing Services. The relevant portion of the Circular reads as under:-

10. The Noticee has further argued that, the category of “Cargo Handling Services” is enacted with the main object to cover the services of container freight terminals.

11. The above view of the noticee is not acceptabic as, the services of handling of cargo provided by a CFS are classifiable under ‘Cargo Handling Service” only when it is provided in the context of transportation and when incidental to freight. I find that, in the case of the noticee, handling of cargo takes place while providing the services of storage and warehousing and such handling of cargo done by the noticee within their CFS area can, in no way, be related to the context of transport or freight. The said services, in fact, are nothing but services incidental to their service 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 of storing or warehousing is not possible. Therefore, such handling services provided within the CFS area is not an independent activity so 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 to storage and warehousing and thus, the activity carried out by the Noticee is correctly classifiable under the “category Storage and Warehousing Services”.

14. I find that what is necessary in law for taxation under the category “Cargo Handling Services” is that the service provided should be relating to or in relation to cargo banding by a cargo handling agency. The service provided should be integrally or inseparably connected with handing of cargo. In other words, loading, unloading, packing or unpacking of cargo and handling of cargo for freight in special containers or non-containerized freight and service provided by container freight terminal or other freight terminal for all modes of transport and activity incidental to freight of cargo are all liable to be taxed under the category “Cargo Handling Services”. In the instant case, the Noticee was carrying out the activity of storing goods in their warehouse and was arranging transportation facility to transport the goods to warehouse since, the activity of loading and unloading is incidental to storage and warehousing services, I hold that the above services are rightly classified under the category “Storage and Warehousing Services”

15. On going through the invoices and ST-3 returns submitted by the Noticee, 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 there is no element of cargo handling present in the instant service and therefore, the activity carried out by the Noticce is correctly classifiable under the category “Storage and Warehousing Services”.”

From the above it is apparent that the order proceeds on the line that container fright stations are primarily meant for “Storage and Warehousing”. This is totally contrary to common sense. No person would bring goods to container fright station just for the purpose of “warehousing or storage”. Goods are brought to “Container Freight Station” for the purpose of import or 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 (Tri-Mum). It is seen that the facts in the said case are significantly different. In the said case specified area within the Container Freight Station was allotted by the MIPL to MAERSK India P. Ltd. It is seen that in the said case the Cargo handling rates were increased simultaneously removing the rental charges from MAERSK India P. Ltd. para 2 on the said order is relevant in this regard.

“2. The facts relevant to the case are briefly as follows. M/s. MIPL is running a container freight station (CFS) at Dronagiri Warehousing Complex, Uran, Navi Mumbai. They entered into a contract with M/s. Maersk Logistics India Pvt. Ltd. (MLOG in short) for the period 2002 to 2004 for providing various services at the CFS. As per the said contract, MIPL provided to MLOG space measuring 2100 sq mtr. in warehouse Nos 4 and 2 for keeping, storing, stuffing and consolidation of export cargo and collected monthly rental of Rs. 10 lakhs for warehouse No. 4 and Rs. 4.35 lakhs for warehouse No. 2. For the period with effect from 1-2-2005, the space provided to MLOG was 3000 sq mtrs. for the same purpose, however, no separate fixed monthly charges were specified in the contract. However, the rates for cargo handling were substantially increased. The department was of the view that the provision of space in the warehouses by MIPL came under the category of storage and warehousing services’ and liable to Service Tax and accordingly demanded Service Tax vide notice dated 2-4 2007 for an amount of Rs.1,18,33,342/-for the period 16-8-2002 to 31-3-2006. The appellant contested the demand and submitted that the reservation of space was in the context of cargo-handling of export cargo which was specifically excluded from the scope of “cargo handling service and hence the demand is not sustainable. The adjudicating authority, held that the reservation of space in the CFS fell under the category of “storage and warehousing service” and liable to Service Tax. However, he held that in as much as the appellant had submitted a letter dated 13-3-2003 and the fact of space reservation was clearly mentioned in the said letter, no suppression can be alleged and held the demand to be time-barred for the period prior to 1-2-2005. in respect of the agreement dated 1-2-2005, he held that the appellant had changed the terms of the contract. While they continued to perform the same services 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 the cargo cannot reach the port “just in time to be loaded into the ship and must reach beforehand, it necessarily involves some amount of storage and warehousing in the godowns of the appellant The service charges received by the appellant are for stevedoring and cargo handling. Handling of export cargo is specifically excluded from the definition of cargo handling services also. However, the appellant is also getting paid a separate amount for storage in their godown from their clients apart from the amounts which they receive for the stevedoring services. This is confined to cargo stored beyond a certain period. Undoubtedly such service is in the nature of storage and warehousing service and is chargeable to service tax as such. In our considered view, the demand on the appellant has to be restricted to the extent the amounts which they have received towards godown rents separately for storage over and above the normal stevedoring charges.”

From the above it is apparent that service tax on Storage and warehousing is chargeable only on the amount separately collected as Storage and Warehousing charges.

In the contract between the parties in the said case the rate charge was mentioned in para 5 of the order as follows:

“Stevedoring, Cargo Handling and Storage Charges :

Stevedoring and Cargo Handling charges shall be paid by TIA to TINNA as under on shipment (B/L) for SBM, Ricebran and other commodities :

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 services provided by them would be “Storage and Warehousing Services”.

4.8.4 Revenue also relied on the decision of Tribunal in the case of Duraflex Services & Construction Technologies Ltd Vs. CCE, Visakapatnam-I- 2019 (25) GSTL 226 (Tri- Hyd). The facts in the said case are also different. In the said case purely “Storage and Warehousing Services” were provided for export cargo and hence the same were held charged against the Service Tax.

4.8.5 The revenue has also relied on decision of Hon’ble High Court of Bombay in case of APM Terminals India P Ltd Vs. CCE, Navi Mumbai- 2019 (21) GSTL 26 (Bom). It is seen that in the said case the facts are different. It is seen that in the said decision Hon’ble High Court had refused to entertain the appeal of M/s APM Terminals India P Ltd. Tribunals on the grounds of jurisdiction. Therefore, it can not be relied upon.

4.9 The impugned orders alleged that the Appellant artificially split charges into two categories viz. “Storage and Warehousing Services” and “Cargo Handling Service” for handling of export cargo by claiming the benefit of specific exclusion in the definition of “Cargo Handling Service”. The impugned order held that the Appellant paid service tax under category of “Storage and Warehousing Services” in the case of storage of import cargo and did not pay service tax by classifying it under category of “Cargo Handling Service” even though the nature of services rendered in respect of import and export was identical. The Appellant submits that finding of the Revenue is contrary to the facts. Both in case of import or export, when cargo was stored in warehouse beyond the specified period as mentioned in the Tariff Card, the Appellant collected storage and warehousing service charges separately from its client and paid service tax under the category of “Storage and Warehousing Services”. Coples of invoices issued by the Appellant for export of services where the Appellant charged service tax under the category of “Storage and Warehousing Services” were produced. Similarly, specimen copies of invoices showing that the Appellant charged service tax under the category of “Storage and Warehousing Services” on imported goods were also produced. Thus, this argument in the impugned order is incorrect.

4.10 The Circular No.104/7/2008-ST dated 06.08.2008 issued by CBEC clarified that transportation is not an essential 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 “Cargo Handling Services” provided in respect of transportation of goods would be classifiable as “Cargo Handling Services” is misplaced and liable to be rejected.

5. In view of above the impugned orders are set aside and appeals are allowed.

(Pronounced in the open court on 13.05.2022)