Custom, Excise & Service Tax Tribunal
Hyderabad Menzies Air Cargo Pvt Ltd vs Hyderabad-Iv on 10 November, 2023
(1)
ST/27383/2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Service Tax Appeal No. 27383 of 2013
(Arising out of OIO No. 25/2013 Adjn. (Commr.) ST dt.03.05.2013 passed by Commissioner
of Customs, Central Excise & Service Tax, Hyderabad-IV)
Hyderabad Menzies Air Cargo Pvt Ltd
Air Cargo Terminal, Rajiv Gandhi International ......Appellant
Airport, Shamshabad, Hyderabad - 500 049
VERSUS
Commissioner of Customs, Central
Excise & Service Tax, Hyderabad - IV
Posnett Bhawan, Tilak Road, Ramkoti,
......Respondent
Hyderabad, Telangana - 500 001 Appearance Shri Anil Kathuria, Shri A.S. Hasija & Shri Nagaraja N, Advocates for the Appellant. Shri V.R. Pavan Kumar, AR for the Respondent.
Coram:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30385/2023 Date of Hearing: 10.07.2023 Date of Decision: 10.11.2023 [Order per: A.K. JYOTISHI] The Appellants, M/s Hyderabad Menzies Air Cargo Pvt Ltd (HMACPL), are a Joint Venture company of 'GMR Hyderabad International Airport Pvt Ltd' (GHIAL for short) and 'Menzies Aviation Cargo (Hyderabad) Ltd' (Menzies for short). The Appellants are into the business of operation and maintenance of Air cargo terminal, providing Cargo Handling services in respect of domestic as well as international cargo, transported by air through Rajiv Gandhi International Airport. They also assist the Customs department in the clearing of cargo (international).
2. Based on the intelligence that they were evading service tax on the services rendered for export cargo by mis-classifying it under 'Cargo Handling Services' (CHS) instead of (i) 'Airport Services' (APS) and(ii) 'Storage and Warehousing Services' (SWS), certain details were called for by the Department. After receiving a list of details of activities of the Appellant and on further enquiry, the Department felt that various services provided by the (2) ST/27383/2013 Appellant were partly falling under SWS and partly under APS and not under CHS, as claimed by them. In view of the same, SCN dated 02.04.2012 was issued demanding service tax under APS and SWS. The breakup is as under:
Service Tax demanded for the period March 2008 to On Services Under proposed category June 2010 (in Rs.) Screening & Rs. 1,88,64,466/- Airport Services Unitization/Build-up Terminal Storage-Processing Storage & Warehouse Rs. 1,07,35,260/-
charges Services
3. The Adjudicating Authority, after going through detailed submissions made by the Appellants, came to the conclusion that activities and services rendered by the Appellants were not in the nature of CHS, rather these were in the nature of APS and SWS. Accordingly, the classification proposed in the SCN was held to be appropriate, and entire demand was confirmed with interest and equal penalty under Sec 78 of the Finance Act, 1994 was also imposed.
4. The Appellant is before this Tribunal in Appeal against the said impugned Order-in-Original dated 03.05.2013.
5. The core issue to be decided is whether in the given factual matrix and the nature of services being provided by the Appellant, the same can be called as CHS (as claimed by the Appellant) or it should be classified as APS and/or SWS (as claimed by the Department). In order to appreciate proper classification of the services, based on the activities and nature of services being undertaken by the Appellant in respect of export cargo, they are detailed below:
1) Unloading/Acceptance of cargo from consignor.
2) Checking label marks and number.
3) Taking gross weight and volumetric weight.
4) Facilitating Customs examination of cargo in case of international cargo which may involve packing and un-packing.
5) After examination receiving Let Export Order from the Customs.
6) Again checking marks and labels and other documents against AWB and acknowledging the same to agent.
7) Loading cargo in trolleys for screening.
8) Screening of cargo through X-Ray machines, and
9) Build-up of cargo in pallets for loading on Aircraft, by ground handling company.(3)
ST/27383/2013
6. While the Department has proposed to classify the activities from S.No. 1-7 for which the Appellants are collecting "Terminal Processing Charges" as SWS, for activities covered under S.No. 8 & 9, the same has been proposed for classification under the category of APS. In order to appreciate these activities, certain factual details need proper elaboration. The Appellants came into existence by virtue of an Agreement between GHIAL and Menzies Aviation PLC (U.K). GHIAL are the concessioners to, inter alia, design, finance, build, operate and maintain international airport at Hyderabad, and pursuant to the said Concessionaire Agreement, GHIAL was also to provide "cargo terminal" at airport with 'cargo handling capacity of 1,00,000 MT' in the initial phase. GHIAL and Menzies floated a Joint Venture company viz., the Appellant herein, for undertaking operation and maintenance of the 'cargo terminal'. The Commissioner has examined the different services rendered by them as detailed in Para 4 above for the outgoing/export cargo. It is an admitted fact that they have been charging 'Terminal processing charges' from exporters and importers for services covered from S.No. 1-7 and screening, unitization/build- up charges from Airlines in respect of S.No.8 & 9.
7. Learned Commissioner also observed that apart from processing export cargo, they are also acting as custodian to Customs, and for the said services, they are collecting 'Terminal processing charges' and 'Demurrage charges' and therefore, having regard to Para 7 of the Board's Circular dated 01.08.2002, the Terminal storage-processing charges and export demurrage charges collected by the Appellant are classifiable under SWS. As regards APS, he relied on Board Circular No. 80/10/2004-ST dated 17.09.2004 and came to the conclusion that services provided to Airlines as well as cargo handling i.e., unitization/build-up and screening of export cargo, was rightly classifiable under APS. He, therefore, confirmed the demand by upholding the classifications proposed in the SCN.
8. For correct appreciation of proper classification of services in respect of activities undertaken by the Appellant, the scope of rival services contended by the Appellant and the Department are reproduced below:
i) Cargo Handling Service (Section 65(23)) (substituted w.e.f 16.5.08):
'Cargo Handling Service' (which became taxable w.e.f. 16.8.2002) means loading, unloading, packing or unpacking of cargo and includes,-
(a) 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 cargo handling service incidental to freight; and (4) ST/27383/2013
(b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking, [but does not include], handling of export cargo or passenger baggage or mere transportation of goods.
Service provided to any person by a Cargo Handling Agency in relation to Cargo Handling Services.
ii) Airport Services (Section 65(105)(zzm)):
'Airport Services' (which became taxable from 10.09.2004 and modified w.e.f. 1.7.2010) are the services provided or to be provided 'to any person, by airports authority or by any other person, in any airport or a civil enclave'.
With effect from 1.7.2010, the following proviso was inserted in the definition vide Nofn.24/2010-ST dated 22.6.2010;
Provided that the provisions of section 65A shall not apply to any service when the same is rendered wholly within the airport or civil enclave;
The terms "Airport" and "Civil Enclave" are defined under Section 2 of the Airports Authority Act, 1994 and they read as follows.
Section 2(b): "Airport" means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger terminal, where facilities like security service, snacks, etc., are provided. The landing and takeoff shall be in relation to 'aircraft'.
Section 2(i): "Civil Enclave" means the area, if any, allotted at an airport belonging to any armed force of the Union, for use by persons availing of any air transport services from such airport or for the handling of baggage or cargo by such service, and includes land comprising of any building and structure on such area.
iii) Storage and Warehousing services (Section 65(105)(zza)):
'Storage and Warehousing' includes storage and warehousing services for goods, including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage.
9. Learned Counsel for the Appellant have tried to explain the nature of services and its classification holding that the activities undertaken by them and as enumerated in the SCN and OIO are not disputed. What is being disputed is whether it is CHS or it is a combination of two different services viz., SWS and APS. They have mainly contended that they are providing full scope of CHS encompassing physical handling as well as documentation services and certain other services such as general supervision, tracing any irregularity management, customs interface, etc. On receipt of cargo which is meant to be exported, the Appellant receives the same in the terminal storage area, which is meant for processing (customs clearance) of cargo in designated area, and thereafter the processed cargo is screened after which the same is built-up together (unitized) consignment wise, and loaded to the Aircraft.
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10. They are also charging demurrage for clearance, beyond 72 Hrs only in and their services are akin to services undertaken by any freight terminal, for any mode of transport. According to the Appellant, the definition of CHS under Sec 65(105)(zr) is an inclusive definition. They also submitted that learned Commissioner, while adjudicating, has erroneously held them to be 'custodian' of the goods, whereas they are not licensed as custodian of goods. They are storing the goods not as custodian but as 'cargo handling agents' for the Airport, which involves a bundle of incidental activities which are required to carry out, to ship the cargo.
11. The Appellants have also submitted that they did not charge, at any point of time, any amount exclusively as "storage charges". As regards screening and unitization/built-up of cargo, they submitted that it is an integral part of CHS, and cannot be called as APS, in view of the definition of APS, as it existed before 01.07.2010, in view of the fact that it needs to be provided by either 'Airport authority' or any person authorized by it in an airport, whereas in their case it has not been provided by either Airport authority or by any person authorized by Airport authority viz., GHIAL. In fact, the Appellants have obtained license from GHIAL to provide the subject service of cargo handling/Freight Terminal.
12. One of the major arguments by the Appellant is that they have been providing the same service of cargo handling involving (i) Terminal storage processing, (ii) Screening and (iii) Unitization/build-up of cargo in reverse order in respect of import cargo also, and paying service tax under the category of CHS, and the learned Commissioner has accepted the classification of CHS in respect of import cargo and payment of service tax thereon; But vivisects the service of CHS in order to deny exemption of service tax, for export cargo. This, according to the Appellant, is a contradictory stand by the Department.
13. On the other hand, the Department has mainly relied on definitions given for the specified services viz., SWS and APS and the clarifications given by CBEC in respect of SWS. The Department has also relied on Airport Authority of India Notification dated 13.06.2003, which has explained the meaning of 'terminal storage processing charges' reproduced below:
"(zc) Terminal Storage and Processing charges means the charges to be levied or collected by the Authority or any authorized Cargo Handling Agency for the use of cargo terminal facilities or its services and other expenses incurred including loading and unloading, storage in warehouses or processing cargo goods, etc. and includes electricity charges, insurance (6) ST/27383/2013 premium, security charges, Terminal Charges Electronic Data Interchange and Electronic Data Interchange service centre charges, Value Added Network service charges, surcharge for heavy cargo and cargo requiring special care such as hazardous, perishable, live animals, valuables and express cargo, etc., and License fee."
14. For the 'demurrage charges', the Department contended that, Appellant will also fall under SWS, as in this case there is storage involved. The Department felt that certain services being provided by the Appellants are clearly falling under APS. Keeping in view the Board Circular dated 10.09.2004, the Department felt that Unitization and Screening/X-ray service, has got nothing to do with CHS and in fact, they are classifiable as APS, as the said services include cargo handling, transit facilities, security service, etc. Further, these services are provided after cargo is stored, moved, screened, readied and unitized, so as to facilitate easy lifting by Airlines. In fact from 01.07.2010, any service provided by any person within an airport, shall be classified under APS, notwithstanding anything contained in Sec 65A.
15. Before the issue of classification is discussed, keeping in view the nature of activities being performed and the charges being collected, it would be relevant to understand the flow of goods and the role of the Appellants in the cargo terminal. It is not disputed that the activities are being performed by the Appellants in the "cargo terminal" for which they are collecting certain charges either from the exporters/freight forwarders/agents or from the Airlines. It is also not in dispute that the goods in question are "cargo" and they are intended for loading into Aircraft for transportation. It is also not in dispute that cargo is meant for export. When the cargo is received at the cargo terminal, the Appellants are unloading and also storing the same in the terminal in the designated area, for completion of certain formalities, documentations, screening, etc. They also assist the Customs in examining of goods, wherever required, by bringing the cargo to the examination area and opening and repacking and sometimes subject to screening also, if required. Once the Customs clearance is given for export by way of 'Let export order', the cargo is generally moved after proper screening to the sterile area, for unitization or any other mode of consolidation in the manner which will be easy for its movement to the Aircraft and storing inside Aircraft. Therefore, the activities undertaken by them in terms of S.No.1-7 as explained above, are in relation to the 'cargo' within the 'cargo terminal', provided to the exporters/freight forwarders/agents in connection with the movement of export cargo. Generally, it is called pre- screening. Sometimes for certain reasons the goods may not be cleared for export and the goods continue to lie in the designated area, for which they are (7) ST/27383/2013 charging demurrage charges. Whereas, sometimes the Airlines are unable to lift the load and thus the export-cleared cargo lies in the sterile area, for which they may charge demurrage from the Airlines. In all these cases, there is a free time and demurrage is charged only beyond free time.
16. The Appellants have vigorously argued that their services would not fall in the SWS on the grounds that they are not in the business of Storage and Warehousing, and they are not a 'Storage and Warehouse keeper'. In order to fall under this category, they had to be a storage or warehouse keeper. Therefore, considering their activities which are mainly related to processing of cargo, till the time they are loaded, cannot be considered as SWS or APS. They have relied on the case law of Modi Construction Co., [2008 (12) STR 34 (Tri- Kol)], wherein, the Tribunal, inter alia, held that, event of levy under CHS arises when service relating to or in relation to handling of cargo is provided by Cargo Handling Agency, irrespective of the mode of the transport used for movement of such cargo. It is also observed that the following activities are contemplated to be taxed as CHS.
"4.5 Combined reading of provisions of Sections 65(105)(zr) and 65(23) of the Act throw light that cargo handling agencies are taxable entities. Cargo handling service provided by such entities attract the levy of service tax. Section 65(23) has a wide amplitude and has brought all like nature activities to its fold expressly and by inclusion of such like nature activities under the class 'cargo handling services'. However classification of service under this category is subject to two exceptions/exclusions: viz.(1) handling of export cargo or passenger baggage and (2) mere transportation of goods. These two activities are beyond the scope of such class from taxation for rationale behind them. Accordingly, cargo handling services provided in respect of domestic cargo only are liable to tax. Event of levy arises when service relating to or in relation to handling of cargo is provided by a cargo handling agency, irrespective of mode of transport used for movement of such cargo. Precisely, following activities which are contemplated to be taxed as cargo handling service are :
(1) By express terms :
(A) Loading, unloading, packing or unpacking of cargo; (2) By inclusive terms :
(B) Handling service relating to cargo :
(i) Provided for freight in special containers or for non-containersied freight;
(ii) Provided by a container freight terminal or, by any other freight terminal; and (3) Cargo handling service provided which is incidental to freight.
4.6 What that appears to be necessity of law for taxation under the class 'cargo handling service' is that the service provided should be relating to or in relation to cargo handling by a cargo handling agency. The service provided should be integrally or inseparably connected with handling of cargo or attributable thereto without being a mere activity of transportation of such cargo since transport service independent of cargo handling is an exception under the scheme of levy by Section 65(23) of the Act. Thus it can be said that loading, unloading, packing or unpacking of cargo and handling of cargo (8) ST/27383/2013 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 are subject matter of taxation under the class "cargo handling service". That apart, any activity incidental to freight of cargo are also liable to be taxed under such class. Mode of transport is irrelevant for incidence of levy once the service provided meets the test of handling of cargo in the manner envisaged by law. It is also not necessary that the cargo should only be meant for transport either vessel in ships or aircrafts."
17. The Appellants have also relied on the case of ITW India Ltd [2007 (8) STR 490 (Tri-Kol)]. In this case, the Tribunal, inter alia, held that CHS covers 'packing of cargo'. It was also held that expression 'packing of cargo' was wide enough to cover the activities such as unitizing, straping, packeting or packing the impugned goods into cargo for subsequent movement by trucks and/or rail. They have also relied on the case of Kerala State Industrial Enterprises Ltd [2012 (28) STR 574 (Ker)] wherein, the Hon'ble High Court has held in detail as to what would constitute and cover under the category of CHS. This case was in the context of the Appellants maintaining air cargo terminal where 'air cargo' for export and passenger baggage for transport by air, were brought and thereafter unloaded and transported to the plane. The Appellants were providing terminal facility for X-raying, security check and completion of customs formalities and short duration retention of goods for transit to the plane. The relevant paras are reproduced below:
"4. Admittedly Section 65(23) under which cargo handling service is brought under service tax, specifically excludes export cargo and passenger baggage from liability. Therefore, no service tax is payable for cargo handling service in respect of export cargo and passenger baggage. The appellant's specific case is that terminal charges collected by them for export cargo and passenger baggage falls within the description "cargo handling services" and so much so, by virtue of the exemption available to these two items under Section 65(23), there is no justification for the department to levy service tax by treating the cargo handling service as a "storage and warehousing service". Standing Counsel brought to our notice the admission made by the appellant in the appeal that appellant or their employees are not handling cargo and they are only providing the terminal building for handling both the Air cargo as well as passenger baggage where unloading, X-raying, short time storage and loading takes place which are handled by employees of the goods owner or agents or the Airlines concerned. Counsel for the appellant rightly contended that the exemption clause provided for exemption from service tax on export cargo and passenger baggage under Section 65(23) should enjoy a liberal construction. We completely agree with this contention because what is specifically excluded from levy should not be brought to tax under another charging entry and if the same is permitted, the same will frustrate the exemption clause. All fiscal statutes provide for tax/duty exemptions to encourage exports and Section 65(23) also should be understood as part of the same scheme. However, we agree with the contention of the Standing Counsel that if charges collected by the appellant from the Airline is really for storage and warehousing covered by Section 65(102), service tax could be levied on such charges. In this regard what we notice is that appellant is not claiming complete exemption from service tax on "terminal charges" collected and so much of the amount collected for storage and warehousing are subject to service tax. This happens only when (9) ST/27383/2013 retention of the Air cargo or passenger baggage in appellant's terminal is beyond 48 hours. Therefore, the only question to be considered is whether retention upto 48 hours of the Air cargo and passenger baggage for X- raying, for completion of all customs formalities and the time taken by the Airlines to lift the cargo could be treated as storage and warehousing for the purpose of levy of tax under Section 65(102) of the Act.
5. The contention raised by Standing Counsel that goods are not physically handled by appellant's employees by itself does not mean that appellant is not handling the goods in the terminal building. X-ray unit is in appellant's terminal and customs formalities including inspection are carried out in the said building. The unloading of goods, X-raying, customs inspection and re- loading amount to handling of goods in transit in the course of export, whether it be as cargo or as passenger baggage. What the appellant charges is for the facilities provided in the terminal building for security check, X- raying and for completion of customs formalities. The department can levy service tax only if any part of the charges levied by the appellant falls within the description of "storage and warehousing" referred to in Section 65(102) of the Act. Storage and warehousing obviously is storing the goods for a duration of time providing safe custody to goods. Nobody sends the cargo or passenger baggage to appellant's terminal building for storage because goods are sent there only for shipment by air. It so happens that there is a time lag between the arrival of the goods in appellant's terminal and the actual despatch of goods by air. The short duration of time taken for unloading, X-raying, completion of customs formalities and time taken for unloading and transport to the plane cannot be said to be time of storage or warehousing of goods. Necessarily goods will have to wait until the Airlines arranges flight and space in the aircraft for lifting the cargo. A reasonable time necessarily has to be provided by the appellant for the Airlines to lift the goods after arrival at their terminal. The appellant's case is that considering the nature of operations, the Airlines companies are given a maximum of 48 hours to lift the cargo without involving any liability for storage and warehousing charges. We are of the view that the department should take a realistic approach keeping in mind the nature of business and the standard arrangement in other Airports. Counsel for the appellant has referred to Circular No. B11/1/2002 dated 1-8-2002 issued by Central Board specifically providing in Clause 3(1) that the services provided in relation to export cargo and passenger baggage are excluded from tax net. However, contention of the Standing Counsel is that the Circular is issued specifically clarifying the scope of exemption under cargo handling services provided under Section 65(23) of the Act. Even though Circular is issued with reference to another charging Section, what is clear from the Circular is that the intention of the Government is, as far as possible to avoid incidence of tax on export cargo and passenger baggage."
18. Operation and maintenance agreement, entered into between GHIAL and Menzies and Cadence Cargo Pvt Ltd, clearly provides for operation and maintenance of 'cargo terminal'. This requirement, inter alia, requires them to undertake various activities relating to cargo and mail handling, equipment for handling of cargo and providing handling services for cargo. They are also required to prepare customs documentation, customs clearance, place cargo under customs control, present cargo for physical examination. They are also required to handle documentation as well as physical handling of outbound and inbound cargo. The outbound and inbound cargo handling, inter alia, requires accepting of cargo, tally and assembly for dispatch of cargo, preparation of (10) ST/27383/2013 cargo, etc. Therefore, in view of the charges leveled under SCN and upheld by the Order of the Original Authority, as also the submissions made by both the sides, it is apparent that activities from S.No.1-7 would be in relation to handling of cargo in the cargo terminal, for which the services are being provided to exporter/freight forwarder/agent in relation to export-bound cargo.
19. Further, Firstly, Some of the activities like short term storage due to a specific condition, Customs examination, documentation, etc., are the activities which are incidental to their main activity of handling of cargo. The main activity, by virtue of just charging and naming the charges as 'terminal charges' cannot become SWS, in view of the fact that the terminal where the export cargo is stored is not meant principally for storage and warehousing, rather for processing of cargo before it is loaded on aircraft for export. In fact there are specific storage and warehouse facility, either public or private, under customs provisions itself, which can be inside cargo terminal or outside, where the goods can be stored subject to certain condition(s). In this case it has not been alleged that they are operating any such warehouse. Therefore, the activities being provided by the Appellant for a consideration, both in the name of terminal charges as well as demurrage charges, would be covered within the scope of CHS. The scope of rival service i.e., SWS would not be an appropriate classification as contended by the Revenue.
20. In view of the analysis of their actual activities and the scope of the said services, the Revenue has primarily relied on notification issued by Airport Authority of India dated 13.06.2003, wherein, they have explained the meaning of 'terminal storage and processing charges'. Merely by resorting to what they felt and what they were recovering as 'Terminal storage charges' would not make this Appellant also a warehouse keeper. The scope of the service has to be determined in terms of express wordings of that classification in Finance Act & Rules, and not in terms of nomenclature used for collecting the revenue for the services provided to the service recipients, in this case, exporter/freight forwarder/agent. In fact, the same notification also indicates that charges can be collected by the authority or any authorized cargo handling agency for various services (emphasis supplied). This precisely supports the contention that the activity being performed by the Appellant is that of 'Cargo Handling Agency' for which they are collecting certain charges in the name of terminal storage processing charges. Therefore, Commissioner was not correct in holding the activities as covered from (S.No.1-7) under SWS.
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21. Another aspect which is relevant is that in any cargo or freight terminal, where goods are received and processed for export, the area in which this is required to be done is called Customs area, notified by Revenue. Within the customs area all the activities of loading, unloading, storage, examination, etc., being done by authorized person only, known as customs cargo service provider (CCSP). These activities are regulated by Customs Area Regulations 2009. A plain reading will also suggest that cargo handling activities are performed before the cargo is exported. Thus such activities are in the nature of handling of cargo only.
22. In so far as the activities relating to S.No.8 & 9, it is observed that these are required for safe passage of export cargo in the Aircraft. These are required to be done in terms of certain mandatory requirements and on specific request from Airlines for safe and easy movement of cargo and its loading and unloading in the Aircraft. These two activities are neither charged to the customers using the terminals, nor are these directly related to the activities concerning CHS. Here, the amount is being collected from the Airlines to whom specific services are being provided as per their requirement. The scope of APS as it existed even prior to its amendment in 2010, includes services provided to Airlines as well as for cargo and passenger baggage handling such as security, transit facilities, landing charges, parking charges etc. It is an admitted fact that services are provided to the Airlines on their specific request and not at the behest of the exporter/freight forwarder/agent. Therefore, these services appear to be classifiable under the category of APS.
23. However, we find that prior to 01.07.2010, when proviso was added to Sec 65(105)(zzm), Airport service is read as - service provided to any person, by Airport authority or by any other person, in any airport or civil enclave. Further, prior to 01.07.2010, we find that Cargo Handling service as defined under Sec 65(23) of the Finance Act includes also activities like loading, packing in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling service incidental to freight, but does not include handling of Export cargo or passenger baggage or mere transportation of goods. We find that the activities as aforementioned in S.No. 8 & 9 are also squarely covered under the definition of Cargo Handling service. We further find that prior to introduction of proviso w.e.f. 01.07.2010 in Sec 65(105)(zzm), Sec 65A was applicable, which provided guidelines for classification of taxable services as follows:
(12)ST/27383/2013 Sec 65A(2) - When for any reason, a taxable service is prima facie, classifiable under two or more sub-clauses of clause (105) of Sec 65, classification shall be effected as follows:
(a) The sub-clause which provides the most specific description shall be preferred to sub-clause providing a more general description;
(b) Composite services consisting of a combination of different services, which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which given them their essential character, in so far as this criteria is applicable;
(c) When a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration.
24. We find that the aforementioned two services at S.No.8 & 9 being screening of cargo through X-ray machines and build-up of cargo in pallets for loading on Aircraft, by ground handling company also fall both under the Cargo Handling service as well as under Airport service. However, by virtue of provisions of Sec 65A, giving the guidance as to classification, as Sec 65(23) occurring earlier than sub-clause (zzm) of Sec 65(105), we hold that these services shall also be classifiable under Cargo Handling service.
25. Accordingly, in view of our aforementioned findings and observations, we find merits in the Appeal of Appellant/Assessee and accordingly, we allow the Appeal and set aside the Impugned Order. All penalties also stand set aside. As we have allowed the Appeal on merits, we leave the ground of limitation open.
26. Appeal is allowed with consequential benefits.
(Pronounced in the Open Court on 10.11.2023) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda