Custom, Excise & Service Tax Tribunal
Cochin International Airport Ltd vs The Dy. Commissioner Of Customs & ... on 16 September, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeals No: ST/06/2007 and ST/562/2008 (Arising out of Orders-in-Appeal Nos. 187/2006-ST dated 16.11.2006 and 148/2008-ST dated 19.08.2008 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Cochin) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes Cochin International Airport Ltd. Appellant Vs. The Dy. Commissioner of Customs & Central Excise (Appeals) Cochin Respondent
Appearance
-None- for the appellant Shri D.P. Nagendra Kumar, JCDR, for the Respondent CORAM MR. P.G. CHACKO, HONBLE MEMBER (JUDICIAL) MR. P. KARTHIKEYAN, HONBLE MEMBER (TECHNICAL) Date of Hearing:16.09.2010 Date of decision:16.09.2010 FINAL ORDER Nos._______________________2010 Per P.G. Chacko(Oral) These appeals are by M/s. Cochin International Airport Ltd. (CIAL for short). There is no representation for the appellant today despite notice, nor any request of theirs for adjournment. After examining the records, we have found enough reasons to dispose of these cases finally at this stage. Accordingly, after hearing the learned JCDR, we proceed to deal with the appeals.
2. In adjudication of a show-cause notice, the original authority had demanded Service Tax of Rs. 41,906/- from CIAL on the demurrage charges collected by the company from various exporters whose export cargo was allowed to be stored and warehoused in CIALs premises during the material period. The demand was raised under the head, Storage and Warehousing services defined under Clause (105) of Section 65 of the Finance Act, 1994 read with the definition of Storage and Warehousing given under Clause (102) of the said Section. The adjudicating authority had also demanded interest on tax and had also imposed a penalty on the Company. In the appeal filed by the assessee against the Order-in-Original, the Commissioner (Appeals) held that Service Tax was not leviable on any demurrage collected on agricultural produce and, accordingly, the case was remanded to the lower authority with a direction to re-quantify the Service Tax payable on demurrage charges collected in respect of goods other than agricultural produce. The appellate authority also held the assessee liable to pay appropriate interest on the amount of Service Tax to be requantified. The appellate authority, further, set aside penalty by granting the benefit of Section 80 of the Finance Act, 1994 to the assessee. Appeal No. ST/06/2007 before us is directed against the decision of the Commissioner (Appeals), dated 16.11.2006.
3. Pursuant to the remand order of the Commissioner (Appeals), the original authority passed a fresh order reconfirming the demand of Service Tax and directing the Company to pay the same with appropriate interest. CIAL once again approached the Commissioner (Appeals). This time, the appellate authority noted that the appellant had not produced any document in support of their claim for exemption from payment of Service Tax on demurrage charges collected by them in respect of agricultural produce. It was noted that such evidence had not been produced before the original authority nor before the appellate authority. The learned Commissioner (Appeals) also noted a case law cited by the assessee vide Karnataka State Beverages Corporation Vs. Commissioner of Service Tax, Bangalore [2006 (4) STR 469(Tri.-Bangalore)], but did not properly consider the same. In the result, the case came to be remanded once again to the original authority vide Order-in-Appeal dated 19.08.2008, which is presently under challenge in appeal No. ST/562/2008.
4. After a perusal of the relevant provisions of law, we find that, in so far as storage of agricultural produce is concerned, Service Tax is not leviable on any demurrage charges collected by the warehousing company inasmuch as the definition of storage and warehousing under Clause (102) of Section 65 of the Finance Act, 1994 reads thus:-
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.
A clarificatory Circular issued by the Board (No. B11/1/2002-ST dated 1.8.2002) made the legal position very clear. We further note that this legal position was correctly understood by the lower appellate authority in the first round of litigation itself and, accordingly, it was held that the demurrage charges collected by CIAL in respect of agricultural produce forming part of the export cargo allowed to be stored/warehoused were not chargeable to Service Tax. Therefore, pursuant to the appellate Commissioners remand order, it was not open to the original authority to demand Service Tax from CIAL in respect of such demurrage charges. The original authority, however, appeared to have acted to the contrary. Consequently, the dispute came to crop up in a second round of litigation, wherein the Commissioner (Appeals) once again remanded the case to the lower authority to requantify the amount of Service Tax after considering any evidence adduced by the party in support of the claim for exemption from payment of Service Tax on demurrage charges levied on agricultural produce. The remand order passed by the learned Commissioner (Appeals) is under challenge before us in appeal No. ST/562/2008. The Commissioner (Appeals) has no power of remand as held by the Honble Supreme Court in Mil India Ltd. Vs. Commissioner [2007 (210) ELT 188(SC)]. For better clarity, we reproduce below the relevant observations of the apex court:
In fact, the power of remand by the Commissioner(A) has been taken away by amending Section 35A with effect from 11-5-2001 under the Finance Bill, 2001. Under the Notes to clause 122 of the said Bill it is stated that clause 122 seeks to amend Section 35A so as to withdraw the powers of the Commissioner(A) to remand matters back to the adjudicating authority for fresh consideration. Therefore, the Commissioner(A) continues to exercise the powers of the adjudicating authority in the matters of assessment. The orders of the lower appellate authority are liable to be set aside on this sole ground. It is also pertinent to note that the learned Commissioner (Appeals) rightly held in favour of the assessee vis-a-vis demand of Service Tax on demurrage charges collected by CIAL in respect of agricultural produce. It appears from the records that the export cargo stored/warehoused in the premises of CIAL included other goods also. But CIAL consistently took the stand that demurrage charges in respect of any goods whatsoever were not exigible to service tax under the head, Storage and Warehousing services. They have also claimed support in this connection from the Tribunals decision in Karnataka State Beverages Corporation case (supra). Apparently, this plea was not considered on merits by the lower appellate authority. The question whether demurrage charges were to be included in the taxable value of storage and warehousing services is a fundamental question which goes to the root of the dispute between the assessee and the Department and the same ought to have been carefully addressed by the learned Commissioner (Appeals). As rightly held by the Honble Supreme Court in the case of Mil India Ltd. (supra), the Commissioner (Appeals) can exercise the power of adjudicating authority also when the Commissioner (Appeals) has no power of remand.
5. In this scenario, we are constrained to allow appeal No. ST/562/2008 by way of remand to the lower appellate authority, the challenge in appeal No. ST/06/2007 having become infructuous. We request the Commissioner (Appeals) to pass fresh order on all the issues including the question whether demurrage charges collected in respect of whatever goods were exigible to levy of service tax under the head, Storage and Warehousing service during the period of dispute on merits in accordance with law after giving the appellant a reasonable opportunity of being personally heard. The assessee may also be given a reasonable opportunity of adducing evidence as to the nature of goods stored/warehoused and the respective demurrage charges. We further make it clear that the question whether demurrage charges collected in respect of agricultural produce is subject to levy of Service Tax is no longer res integra inasmuch as this issue stands settled in favour of the assessee.
6. Both the appeals are disposed of.
(Pronounced and dictated in open Court) (P. KARTHIKEYAN) Member (T) (P.G. CHACKO) Member (J) /pr/