Case Law Details
M/s. Hindustan Petrochemical Corporation Ltd. Vs Commissioner of Central Excise (Appeals) (CESTAT Bangalore)
From the records made available and argument proposed, it comes out that the appellant M/s. Hindustan Petrochemical Corporation Ltd. (HPCL) though are performing certain activities in relation to the maintenance and safety of the tank trucks and are issuing a certificate to the effect that the tanks are purged/degased, the same cannot be considered to be a service within the scope of “Technical Inspection and Certification Service”. It is to be understood that the appellants are not basically an agency involved with the testing and certification. In fact, it is abundantly clear that they are performing certain activities which make the truck tanks fit to be filled with LPG for further transportation. This is to be construed only as an activity related to the safety and maintenance of the tank truck. We are inclined to come to a conclusion that M/s. HPCL have not fulfilled the conditions so as to impart the activity of purging and degassing tank trucks as “Technical Inspection and Certification Service”.
FULL TEXT OF THE CESTAT JUDGMENT
The appellants, M/s. Hindustan Petroleum Corporation Limited, are Government of India undertaking engaged in the business of refining of crude and marketing of various petroleum products. The appellants have facility to store imported as well as indigenous LPG at Mangalore. From these facilities, LPG is sent through tank trucks to various LPG bottling plants of oil distribution companies. Whenever LPG tank trucks require any repair or mandatory testing of safety valves, the tanks are cleaned and completely degassed. During this activity, water is filled in tank mounted on the truck and discharged. Water is displaced by LPG vapors. For this activity, the appellant collects cost of water, LPG and the labour charges from the truck owners. The department contended that the activity undertaken by the appellants fairly falls under the heading “Technical Inspection and Certification Service”. A show-cause notice dated 28.6.2006 was issued and confirmed by Order-in-Original No.34/2006 dated 4.12.2006 holding that any repair to truck tankers had to be conducted with the advance approval in writing and the repair work should be conducted as per the code IS 2825 / BS 5500; the contractors are allowed to purge and degas the trucks; therefore, competent party duly approved by CCOE or the appellants themselves provide such service; from the certificates issued by the appellants, it is apparent that they have certified that the truck tankers are purged as required under petroleum law. The Commissioner (A) vide Order-in-Appeal No.112/2008 dated 21.8.2008 upheld the entire demand of service tax with interest and penalty. Hence, this appeal.
2. The appellant submitted that for an activity to be classifiable under the category of “Technical Inspection and Certification Service”, the ingredients provided under Section 65(108)(109) of the Finance Act, 1994 read with Section 65(105)(zzi) of the Finance Act, 1994 which reads as follows needs to be satisfied.
Section 65(108) : “technical inspection and certification” means inspection or examination of goods or process or material or information technology software or any immovable property to certify that such goods or process or material or immovable property qualifies or maintains the specified standards, including functionality or utility or quality or safety or any other characteristic or parameters, but does not include any service in relation to inspection and certification of pollution levels”;
Section 65(109) : “technical inspection and certification agency” means any agency or person engaged in providing service in relation to technical inspection and certification”;
65(105)(zzi) to any person, by a technical inspection and certification agency, in relation to technical inspection and certification;
From the above, it is clear that the taxability will depend on the conditions that such services are provided by an agency; such agency should involve in inspection or examination and on completion of such inspection or examination; a certificate is issued stating to meet any of the criteria like quality, maintenance of standards, functionality or utility, safety or any other characteristics. The appellants contend that they are not an agency involved in the service of technical inspection and certification. The activity of degassing and purging does not involve inspection or examination of any goods but it is an activity by itself. The activity of degassing of LPG tankers is required to be completed before sending the trucks for mandatory testing of safety valves/repairs, etc., Similarly purging is done only after completion of any repairs to ensure that there will not be any loss during further loading of the tanker with LPG. The appellant submitted that mere activity of checking functionality, quality, utility or certifying the same will not fall in the ambit of “Technical Inspection and Certification Service”. They placed reliance on the following case laws.
- Antony Garages Pvt. Ltd. vs. CCE: 2015 (38) STR 49 (Tri.-Mum.)
- Harshita Handling vs. CCE: 2010 (19) STR 596 (Tri.-Del.)
- M/s. Pressure Vessels and Equipments Testing Enterprises vs. CCE: 2013-TIOL-142-CESTAT-MAD.
- Sri Ayyappan Cylinders vs. CCE: 2017-TIOL-3604-CESTAT-MAD.
2.1 The appellant further pleaded that the demand for the period 1.7.2003 to 31.3.2005 is barred by limitation. The department had complete knowledge of the activities of the appellants and therefore, extended period cannot be invoked. As the demand of service tax itself is not sustainable, the question of payment of interest and penalty will not arise.
3. The learned DR has reiterated the findings of Order-in-Original and Order-in-Appeal and have pointed to the fact that as can be seen from page 76 of the paper book, the appellants are issuing a degassing certificate to the effect that “This is to certify that LPG tank bearing registration No of on contract with is degassed at MLIF, Mangalore on The bulk tank is being sent out after degassing.” And they are also issuing a certificate to the effect that LPG tank truck is purged. From the same, it is abundantly clear that the appellants have not only inspected the tanks and performed the activity of purging and degassing but also have issued a certificate to that effect which makes the activity fall under “Technical Inspection and Certification Service”; therefore, the demand, interest and penalty are sustainable.
4. Heard both sides and perused the records.
5. From the records made available and argument proposed, it comes out that the appellants though are performing certain activities in relation to the maintenance and safety of the tank trucks and are issuing a certificate to the effect that the tanks are purged/degased, the same cannot be considered to be a service within the scope of “Technical Inspection and Certification Service”. It is to be understood that the appellants are not basically an agency involved with the testing and certification. In fact, it is abundantly clear that they are performing certain activities which make the truck tanks fit to be filled with LPG for further transportation. This is to be construed only as an activity related to the safety and maintenance of the tank truck. We are inclined to come to a conclusion that M/s. HPCL have not fulfilled the conditions so as to impart the activity of purging and degassing tank trucks as “Technical Inspection and Certification Service”. Therefore, the appeal is allowed with consequential relief, if any.
(Order was pronounced in Open Court on 08.06.2018.)
