Custom, Excise & Service Tax Tribunal
Khimji Visram & Sons vs Commissioner Of Service Tax, Mumbai-I on 5 November, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. ST/168/11 & ST/176/11-Mum [Arising out of Order-in-Appeal No. RBT/73-74/2010 dated 26/11/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone-I] For approval and signature: Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
=======================================================
Khimji Visram & Sons
:
Appellant
VS
Commissioner of Service Tax, Mumbai-I
:
Respondent
Appearance
Shri R. V. Shetty, Advocate for the Appellant
Shri Sanjeev R. Nair, Examiner (AR) for the Respondent
CORAM:
Honble Mr. P.S. Pruthi, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 05/11/2015
Date of decision: 05/11/2015
ORDER NO.
Per : Ramesh Nair
The appeals are directed against Order-in-Appeal No RBT/73-74/2010 dated 26/11/2010, wherein the Ld. Commissioner partly allowed the appeals filed against Order-in-Original Nos. SKY/R-60/2009 dated 18-02-2009 and SKY/R-131/2009 dated 10-07-2009.
2. The facts of the case are that the appellant filed refund claim amounting to Rs. 93,034/- on 26-03-2009 for a period July, 2008 to September, 2008, and refund claim of Rs. 79,27,347/- for the period October, 2007 to June, 2008 was filed on 21-02-2008, 26-05-2008 and 29-08-2008. The refund claims filed under Notification No. 41/2007-ST dated 06-10-2007 in respect of General Insurance Service, Goods Transport Agency Service, Port Service (Terminal Handling Charges), Custom House Agent Service, Technical Certification & Inspection Service and Storage & Warehousing Service. The Adjudicating Authority has rejected the aforesaid claim vide Adjudication Orders dated 18-02-2009 and 10-07-2009. Aggrieved by both the Order-in-Originals, the appellant filed the appeals before the Commissioner (Appeals) who allowed the refund only in respect of transit insurance service however rejected claims of all these services and partly General Insurance related to Spot Insurance that is the stage prior to transit the goods. The Ld. Commissioner rejected the claim on the following grounds:-
(i) Port Service (Terminal Handling Charges) The invoices in respect of this service was not issued by the Port Authority to the Appellants name whereas the same was issued by CHA who is neither port nor authorized by port. The invoices mention the service as Business Auxiliary Service or Business Support Service or Custom House Agent Service which are not notified under the said notification.
(ii) Insurance Service The appellant is not eligible for refund for the spot insurance, which are for goods stored and/or lying inside godown and/or press house and/or pala house and/or factory premises. There is no correlation of export cargo with the said insurance policy.
(iii) Goods Transport Agency Service Exporter invoice details relating to export goods are not mentioned in the lorry receipt and corresponding service. The appellant have not given declaration in the refund claim as per condition (iv) of notification.
(iv) Custom House Agent Service On checking of sample invoices, it was found that the appellant is not satisfied the conditions (i)(a), (b) and (c) i.e. invoice of Custom House Agent does not bear (a) number and date of shipping bill, (b) description of export goods, (c) number and date of export invoice.
(v) Technical Certification & Inspection Service Verification of sample invoices shows, the appellant has not satisfied condition (i) in as much as they have not submitted any written agreement with buyer requiring inspection and certification of said goods.
(vi) Storage & Warehousing Service The appellant has not submitted any evidence that the said goods are stored in a storage or warehouse which is approved by the competent authority and the storage or warehouse is exclusively used for the purpose of storage & warehousing of export goods.
3. Shri R. V. Shetty, Ld. Counsel for the appellant submits that they have given up the claim in respect of Technical Certification & Inspection Service and only contesting the rejection of refund claim in respect of Port Service (Terminal Handling Charges), General Insurance Service, Goods Transport Agency Service, Custom House Agent Service, and Storage & Warehousing Service. It is his submission that in respect of Port Service, there is no dispute, that service provided by the port authorities but the bills were raised by the port authority to Custom House Agent/ Shipping Line Agent/ Clearing & Forwarding Agent etc on the behalf of the exporters and in turn these agencies raised bills to the exporter. This is a general practice prevailing in respect of Port Service. Therefore, except the billing pattern the service remaining as Terminal Handling Charges, therefore admissible for refund. Regarding Spot Insurance, he submits that export goods stored in the godown are assigned lot number and the lot number is reflected on input service provider invoice as export invoice/shipping documents, therefore the export goods can be easily correlated with insurance policy. He also submits that the documents issued by insurer, including reinsurer for payment of insurance premium are specific to export goods and are in the name of exporter. Therefore, there is a direct correlation of export with the insurance policy. Regarding Goods Transport Agency Service he submits that the charge for non-compliance of condition is procedural, however the Goods Transport Agency Service used for transportation of export goods are not in dispute therefore the refund should not be rejected. He placed reliance on the judgment of CCE, Ahemdabad-II vs. Dishman Pharmaceuticals & Chemicals Ltd. [2010-TIOL-1639-CESTAT-AHM]. As regard refund in respect of Custom House Agent Service, he submits that the conditions (i)(a), (b) and (c) of Notification No. 41/2007-ST are procedural. However the correlation of export goods can easily be established on the basis of documents such as export invoice, shipping bill, bill of lading and input service providers invoice etc. Therefore substantial benefit of refund could not have been denied. He further submits that the lower authorities rejected the refund claim in respect of Storage and Warehouse Service for non-fulfillment of condition (i) and (ii). He submits that the Storage & Warehouse Service used only for export goods. The correlation of export goods with input services can be easily established on the basis of documents such as export invoice, shipping bill, bill of lading and input service providers invoice etc. Therefore merely for lapse of procedural condition, refund could not have been rejected. In support he placed reliance on the following judgments:
(i) Manubhai & Co. Vs. Commr of S.T., Ahmadabad
- 2011 (21) STR 65 (Tri. Ahmd)
(ii) Commr of S. T. Vs. Convergys India Pvt. Ltd.
2010 (20) STR 166 (P & H)
(iii) Skoda Auto India Pvt. Ltd. Vs. Commr of C. C. Ex, Aurangabad
- 2010 (253) ELT 135 (Tri. Mum)
(iv) Mangalore Chemicals & Fertilizers Ltd. - 1991 (55) ELT 437 (SC)
4. On the other hand, Shri Sanjeev R. Nair, Ld. Examiner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that the Ld. Commissioner (Appeals) has upheld the rejection of refund claim on the observation that the appellant have not complied with conditions prescribed for each of the service on which refund claim was sought for. He submits that the refund is governed under Notification No. 41/2007-ST subject to conditions prescribed therein. If the conditions are not complied with and still the refund is granted, whole objective of the Notification gets redundant.
5. We have carefully considered the submissions made by both the sides.
6. The Ld. Counsel has taken us to the various documents such as input service invoices, export invoices, shipping bills, lorry receipt etc. and shown us that the nexus of input services on which refund was sought for, with the export goods gets established. However, both the lower authorities have not perused such records and the refund was rejected only on the ground that conditions prescribed in the Notification were not complied with.
6.1 As regard Port Service, refund was rejected on the ground that the invoice was not issued either by the port authorities or their agent. Therefore, on the invoices issued other than the said persons refund in not admissible. We do not agree with this ground alone for the reason that it is an admitted general practice that in respect of Port Services, the port authorities issue invoices for the services in favour of Custom House Agent/Shipping Line Agent/Clearing & Forwarding Agent and in turn these persons raise invoices to the client. In the present case the service tax amount has been shown in the invoices, however the same was not verified. Regarding the payment of service tax on the port services it needs to be verified.
6.2 Regarding Goods Transport Agency Service, merely because certain conditions such as invoice number and/or shipping bill no. not mentioned in the lorry receipt, but from other details and reference of goods it can be established the correlation of GTA Services with the export goods and the declaration also made in the refund claim to that effect. However, even though specific declaration is not there but from other details the nexus of the service with the export goods can be established, which is sufficient. However, the same needs verification.
6.3 Similarly in respect of other services such as Custom House Agent Service, Storage & Warehouse Service refund was rejected only on the ground that the conditions of the Notification were not complied with. On perusal of the records, we find that with one or other documents either on the basis of reference of documents or identity of the goods, it clearly establish the correlation between the input services and export goods, if that is so, then this procedural condition even if not complied with scrupulously, refund cannot be rejected. The conditions prescribed in the Notification are directory and not mandatory. Moreover from all the conditions, it clearly appears that such conditions are only to ascertain the nexus between the services and export goods. If, with other corroborative documents, the same purpose is served as mention in the Conditions, the refund should be allowed. However, we find that the Ld. Commissioner (Appeals) proceeded only on the ground that conditions prescribed in the Notification were not complied with, but he has not verified other corroborative documents by which nexus is otherwise established. Therefore, we are of the view that the matter needs to be remanded to the Original Adjudicating Authority for reconsideration of the refund filed by the appellant. We, therefore, remand the matter to the Original Adjudicating Authority to pass a denovo adjudication order considering our above observations. The appeals are allowed by way of remand in the above terms.
(Dictated in court) P.S. Pruthi Member (Technical) Ramesh Nair Member (Judicial) saifi 8 ST/168/11 & ST/176/11