Custom, Excise & Service Tax Tribunal
Aban Loyd Chiles Offshore Ltd vs Commissioner Of Service Tax on 7 June, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. S/3/2008
[Arising out of Order-in-Original No.121/2007 dt. 5.10.2007 passed by the Commissioner of Service Tax, Chennai]
Aban Loyd Chiles Offshore Ltd.
Appellant/s
Versus
Commissioner of Service Tax,
Chennai
Respondent/s
Appearance :
Shri V.S. Manoj, Advocate Shri V.V. Hariharan, JCDR For the Appellant/s For the Respondent/s CORAM:
Dr. Chittaranjan Satapathy, Honble Technical Member Mr. D.N. Panda, Honble Judicial Member Date of hearing : 7.6.2012 Date of decision : 7.6.2012 Final Order No.____________ Per D.N. Panda Being aggrieved by the order of adjudication dated 5.10.2007 levying service tax of Rs.1,70,22,436/- as well as education cess of Rs.3,40,449/- followed by interest and penalty under Sections 76 & 77 of Finance Act, 1944 holding that appellant had availed storage and warehouse services and incurred liability under Finance Act, 1994, came in appeal before Tribunal against that order.
2. The facts in issue were that the appellant as a Floating Production Unit (FPU) was engaged in offshore for drawing crude oil from subsea wells in sea and processes and transfers the processed crude oil through a buoy into a vessel called Floating Storage and Offloading unit (FSO) through which the crude is further transported to fleets. Real process of crude oil occurs at the FPU. One foreign company called, M/s.Prosafe Production Services Private Ltd. (in short PROSAFE), Singapore was paid certain amount by the appellant for provision of operations personnel, maintenance, spare parts, supplies and all other resources necessary for operation of FSO. The production of crude oil by the appellant was done in terms of a contract with M/s.Hardy Exploration and Production (India) Inc. (in short, HARDY). The payments made by the appellant to PROSAFE was held to have been paid for storage and warehouse charges on the ground that temporary storage of processed crude and offloading of the same was provided by PROSAFE. Revenue considered that storage and warehousing was taxable service and raised demand by the impugned order.
3. Ld. Counsel appearing on behalf of the appellant submitted that the foreign party i.e. PROSAFE did not provide any taxable service to the appellant for which the appellant as a recipient of aforesaid service shall not be liable to service tax. It was also contended that there was neither storage nor warehouse service provided by PROSAFE. Therefore, appeal may be allowed with consequential relief. It was further prayed by ld. Counsel that since the appeal was not heard for long time, application for extension of terms of stay order has been made. If appeal is disposed off today, that application shall become infructuous and may be disposed accordingly.
4. Heard both sides and perused the record.
5. To bring an assessee to the purview of the taxing entry under Section 65 (105) (zza), it is necessary for the Revenue to establish that service should have been provided by a storage or warehouse keeper in relation to storage and warehousing of goods. The terms storage and warehousing has been defined in Section 65 (102) reading as under :-
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;
6. On examination of the adjudication order, nowhere it is possible to see that PROSAFE was carrying out economic activity of storage and warehouse keeper. Ld. Adjudicating authority in para 31.4 of his order recorded that in terms of the agreement, PROSAFE was responsible for maintaining floating storage and offloading unit system and was to operate the system efficiently to receive storage and deliver correctly in accordance with the specification and operating requirements. That does not bring the activity of PROSAFE squarely within the fold of Section 65 (105) (zza) as a storage or a warehouse keeper. Rather the nature of responsibility that was undertaken by PROSAFE as recorded by ld. Commissioner makes it clear that PROSAFE was a part of the operating team for processing and transferring crude oil. Being an agent of the process of production, it was not a storage or warehouse keeper. Therefore, service was not provided by the foreign agency as storage or warehouse keeper. Accordingly, the appellant shall not be liable to pay service tax as the recipient of service of the nature not falling within the purview of Section 65 (105) (zza) of Finance Act 1994 read with Section 65 (102) of the said Act. The appeal is thus allowed. Since the appeal is disposed today, application for extension of terms of stay order is disposed as infructuous.
(reasons of the decision and the decision
pronounced in open court on 7.6.2012)
(D.N. PANDA) (DR. CHITTARANJAN SATAPATHY)
JUDICIAL MEMBER TECHNICAL MEMBER
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Appeal No.S/3/2008
Appeal No. S/3/2008