Custom, Excise & Service Tax Tribunal
Shreem Coal vs Commissioner Of Central Excise on 1 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No.I APPEAL No.ST/116 & 117/08, EDM/806/04, STDM/06/06, ST/14 to 19/06, ST/110/07, ST/47/08, ST/62/07, ST/71/07 & ST/99/07 (Arising out of Order-in-Original No.06/ST/2008/C dated 11/03/2008 passed by Commissioner of Central Excise, Nagpur) For approval and signature: Honble Mr.Justice G Raghuram, Pesident Honble Mr.S.S.Garg, Member (Judicial) Honble Mr. Raju, Member (Technical) 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 :Yes 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? ========================================
Shreem Coal SSV Coal Carriers ITW India Ltd., Coal Carriers Appellants Vijaylaxmi Pvt. Ltd., Gajanand Agarwal Vs. Commissioner of Central Excise, Respondent Nagpur, Bhubaneswar-II Commissioner of Central Excise, Applicant Hyderabad Vs. ITW India Ltd., Respondent Appearance:
Shri. V Shridharan, Advocate , Shri Badrinarayan, Advocate Shri Vinay Jain, CA, Shri Kartik Kurmy,Advocate Shri SB Sharma, Advocate, Shri Utkarsh Srivastav, Advocate for appellants Shri Roopam Kapoor, Comm. & Shri DV Nagvenkar, Addl. Comm. (ARs), for respondent CORAM:
Honble Mr.Justice G Raghuram, President Honble Mr. S.S.Garg, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing : 01-02/02/2016 Date of Decision : /2016 ORDER NO Per: Raju This case involves following appellants A The coal handlers namely,
i) Coal Carriers,
ii) Vijaylaxmi Pvt. Ltd. and
iii) Gajanand Agarwal
iv) Shreem Coal,
v) SSV Coal Carriers, These coal handlers are involved in the loading/unloading of coal in the coalaries and into railway wagons in railway sidings.
B The Packers namely
i) ITW India ltd., Hyderabad
ii) ITW India ltd., Orissa These packers were engaged in Palletisation or packing of goods for the purpose of ease of transport. ITW India at Orissa was engaged in palletisation and marking of refractory bricks. ITW India at Vishakhapatnam was engaged in the strapping, marking and end cutting of the metal Coils. Both the activities were done within the factory of the client.
It can be seen that there are in fact two different sets of facts and issues. In case of coal handlers the dispute is regarding classification of service under the Cargo Handling Service. In case of packers the dispute is regarding the alternate classification under packaging services and Cargo Handling Service. The coal handlers and packers filed following appeals before the Hon Supreme Court of India.
S.No Appellant CA No Order appealed against Forum Reference 1 ITW India Ltd 6038-6039 of 2007 CESTAT (Kolkatta) 2007 (8) S.T.R. 490 2 ITW India Ltd 1470-1474 of 2011 High Court (AP) Order dated 14.3.2011 in CEA No 49/2009, 15/2010, 18/2010, 20/2010 and 38/2010 3 Coal Carriers 5595-5596 of 2011 HC of Orissa 2011(24)STR-395 4 Vijaylaxmi 7384-7385 of 2011 HC of Orissa 5 Gajanand Agarwal 7386-7387 of 2011 HC of Orissa 6 Shreem Coal carriers 1687 of 2015 CESTAT (Mumbai) 2015 (37) S.T.R. 1067 7 SSV Coal carriers 1697 of 2015 CESTAT (Mumbai) The preliminary issue raised by revenue relates to the scope of the remand. The revenue has argued and submitted in their written submissions as follows 4. The order of Honble Supreme Court wherein it has been observed that needless of mention the larger bench of the CESTAT shall decide all the issue involved needs to be viewed in light of the above. All the issues would refer to all the issues involved in the contrary decisions of this Tribunal and not the issues which have already been settled. Reliance in this regard is also placed on the observations of the Honble Supreme Court in the said para wherein the Honble Court had directed that We, accordingly, set aside both the orders and remit the cases back to the CESTAT with a request to the president, CESTAT, to constitute a larger bench for deciding the issue involved. The Honble Court had remanded the matters primarily for the purpose of deciding the conflict arising out of the two orders as elaborated in set aside both the orders. It is submitted that the other cases tagged along with the two ITW orders does not have any correlation with the factual issues involved in the case of Coal Carriers, Gajanand Agrawal, Shreem Coal, SSV Coal Carriers. It was argued by the revenue that the remand is only in two cases where there is contradiction between two orders of CESTAT. There is no remand in cases where there is no contradiction. It is seen that the Honble Supreme Court while disposing of aforesaid Civil Appeal and others observed as follows:
Out of these appeals, some of the appeals are filed by the assessees and others by the Department as two Benches of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as CESTAT) have taken a contrary view.
Having regard to the aforesaid situation, counsel for both the parties agree that the matters be remanded back to the CESTAT so that it is decided by a larger bench to resolve the conflict.
We accordingly, set aside both the orders and remit the cases back to the CESTAT with a request to the President, CESTAT, to constitute a larger Bench for deciding the issue involved. Since the matters have now become old, we would appreciate if the larger bench decides the matter within one year. Needless of mention the larger bench of the CESTAT shall decide all the issues involved. The appeals stand disposed of. The Honble Supreme Court in its order has observed as under
two Benches of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as CESTAT) have taken a contrary view.
Based on this observation Honble Supreme Court further orders that We accordingly, set aside both the orders and remit the cases back to the CESTAT with a request to the President, CESTAT, to constitute a larger Bench for deciding the issue involved.
From the above directions it is clear that only two orders of the CESTAT which have taken contrary view have been set aside and remitted to the larger bench of CESTAT. However it is noticed that in the case of coal handlers, CESTAT order has been upheld by Hon High Court of AP. In the case of packers there are orders of Tribunal and of Hon High Court of AP, taking contrary stand. The disputes involved are examined in detail in following paras.
2 In case of Coal handlers appeal was filed against following orders
a) Honble High Court order in case of Coal carriers dated 25/02/2011
b) Tribunal order in case of Shreem Coal carriers 2015 (37) S.T.R. 1067 Both these orders are examined below with a view to see if there were any contrary views. First of all the two orders under appeal are not of CESTAT but one is of Hon High Court and another of CESTAT.
2.1 i) Honble High Court order dated 25/02/2011 In case of parties listed in first para as A(i) A(ii) and A(iii) the order was passed by Honble High Court of Orissa. Honble High Court order dated 25/02/2011 as reported in 2011(24)STR-395 observed as follows
23.?On the basis of the said terms and conditions of the contract between the parties it has come to the conclusion by the Assessing Officer and held that activity undertaken by the appellant squarely falls within the cargo handling service and service tax is payable on the gross amount received by the noticee. Further, it is held that it has violated the provisions of Sections 68, 69 and 70 of the Finance Act, 1994 as amended. Further, the Finance Act, 2002 brought Cargo Handling Services under the Service Tax net with effect from 16-8-2002 vide Notification No. 8/2002-S.T., dated 1-8-2002. The services shall be taxed if provided by a Cargo Handling Agency. Section 65(105) read with Section 65(23) of the Finance Act, 1994 as amended provides for the levy of Service Tax on Cargo Handling Services with effect from 16-8-2002. Therefore, it is held that every such service provider is to get itself registered and follow the procedure including payment of service tax provided in the Service Tax Laws. Therefore, it is further held that the appellant received the amount for the cargo handling service rendered by them to M/s. MCL to the proper officer of Central Excise by not obtaining the registration, not paying service tax and not submitting any return with the intent to evade payment of service tax. The appellant failed to disclose wholly or truly all the material facts required for verification thereby the values of taxable service has escaped and service tax was not paid. Therefore, Assessing Officer held that the extended period in terms of Section 73(1)(a) of Chapter V of the Finance Act, 1994 is rightly invoked against the appellant and determined the tax recoverable under Section 68 read with Section 73 of the Finance Act, 1994 along with interest under Section 75 of the Act also imposed penalty of Rs. 500/- under Section 75A of the Act.
24.?The aforesaid findings of the First Appellate Authority exercising appellate jurisdiction and power by recording his reasons were examined by the CESTAT in the Second Appeal. The CESTAT in its concurrent finding of fact with reference to the grounds urged and considering the relevant law placed by the parties held that the order Impugned in the appeal does not call for any interference. However, penalty is set aside holding that there is no intention on the part of the appellant to suppress the payment of service tax to the Revenue. Therefore, that portion of the order is set aside. After carefully examining the correctness of the findings we are of the view that the grounds urged in respect of the first question is not tenable in law and the same is liable to be rejected.
The Hon High Court had upheld the decision of the tribunal reported in 2009 (13) S.T.R. 138 (Tri. - Kolkata). Tribunal in that case had observed as under
15.?Combined reading of provisions of section 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-containerised 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.
16.?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 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 is 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 by vessel in ships or aircrafts.
17.?It was noticed from the agreement of the parties that time was essence of the contract. The nature of activity that was carried by the Appellants was to load the cargo i.e. coal in the Railway wagons. Such an activity squarely falls under the definition of cargo handling service! provided by Section 65(23) read with Section 65(105) of the Finance Act, 1944 (sic) (1994) and brings the appellants to the fold of law for such service provided. Accordingly we decline to intervene to the orders passed by the Ld. First Appellate Authority except in the matter of penalty which we consider not imposable on the facts and circumstances of the case. We intervene to the Revisional order involved in Appeal case No. 41/06 and waive entire penalty imposed finding no justification of imposition since there was no willful suppression. We noticed that the appellants had no intention to cause evasion of revenue but at the infancy stage of implementation of law there appears to have confusion as to taxability. Accordingly, we waive the penalties levied under different Section of the law on all the appellants by the impugned orders. But we make it clear that when tax was leviable and realizable, the appellants shall be required to make payment of interest on the tax. Interest shall be calculated as per law in all cases and realised.
2.1 ii) Tribunal order in case of Shreem Coal carriers 2015 (37) S.T.R. 1067 In case of parties listed in first para as A(iv) and A(v) the order was passed by Tribunal relying upon the decision of the Honble High Court of Orissa dated 25/02/2011 as reported in 2011(24)STR-395. The tribunal in its order (reported as 2015 (37) S.T.R. 1067 (Tri. - Mumbai)) had observed as under
5.?We have carefully considered the submissions made by both the sides.
5.1?Section 65(23) of the Finance Act, 1994 defines the Cargo Handling Service as under :
Cargo handling service means loading, unloading, packing or unpacking of cargo and includes 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, but does not include handling of export cargo or passenger baggage or mere transportation of goods.
5.2?From the above definition, it can be seen that loading, unloading, packing or unpacking of cargo falls within the Cargo Handling Service. The next question is whether the coal at pit-head is a cargo or not. The statute does not define what cargo is; therefore, the dictionary meaning of the term has to be taken for deciding what cargo is. According to the Blacksmith dictionary, the term cargo means, the load (that is freight) of a vessel, train, truck, aeroplane or other carrier. Thus any goods which are meant for transportation from one place to another by any mode of transport could be considered as cargo. Therefore, the mined coal at pit-heads required to be transported to stockyards or crushing sites from the mine area can be certainly considered as cargo. Therefore, the activity undertaken by the appellant clearly falls within the definition of Cargo Handling Service as defined in law. This issue was examined at great length in the case of Gangadhar Bulk Movers Pvt. Ltd. case (supra) wherein also the issue related to classification of service in respect of loading of coal on tippers by hiring pay-loaders and transporting from one place to another within the mining area. After considering the various decisions including those involved in the Modi Construction Co. and Sainik Mining & Allied Services Ltd. (supra), this Tribunal came to the conclusion that the said activity would fall within the purview of Cargo Handling Service and leviable to Service Tax accordingly. However, the Tribunal in the said case held that as there was a confusion as regards the taxability of the activity, the demand should be restricted to the normal period of limitation and extended period of time could not be invoked. The same ratio was followed by this Tribunal in the case of Gayatri Carriers Pvt. Ltd. wherein also the question for consideration was handling of coal in the mining area belonging to South Eastern Coal Ltd. prior to 1-6-2001. Following the ratio in Gangadhar Bulk Movers Pvt. Ltd. case (supra) this Tribunal again took the view that the activity of loading and unloading of coal in the mining area would come within the purview of Cargo Handling Service. The Honble High Court of Orissa in the case of Coal Carriers (supra) held that loading of coal into the railway wagons would fall within the definition of Cargo Handling Service. The Honble High Court also observed that as per the dictionary meaning the goods which are being carried or transported by any means of transportation and has become load of the trucks would also come within the meaning of cargo and therefore, the activity was squarely covered by Cargo Handling Service as defined in law. In this view of the matter, we are of the view that the activity undertaken by the appellant squarely falls within the scope of Cargo Handling Service as defined in law.
5.3?---
5.4?As regards the invocation of extended period for confirmation of demand, we notice that there was a lot of confusion regarding the scope of Cargo Handing Service and there were conflicting decisions by the Tribunal and others in this regard. Therefore, the appellant could have entertained a bona fide belief that the activity undertaken by him would not come within the purview of Service Tax liability. Therefore, the invocation of extended period of time and imposition of penalties on the appellant are not clearly justified in the facts of the case.
5.5?In view of the factual and legal matrix as discussed above, we hold that the activity of loading/unloading of coal by engaging tippers would come within the purview of the Cargo Handling Service and the appellant would be liable to discharge Service Tax liability accordingly. As regards the mining of sand from the riverbed the said activity would come within the scope of mining service and not under Cargo Handling Service. Since there was a confusion about the scope of levy, the extended period of time is not invocable in the present case and accordingly, the demand should be restricted to the normal period of limitation. The appellant would be liable to pay interest on the Service Tax demand payable for the normal period of limitation. Since the dispute relates to the classification of service, imposition of penalties are not warranted. Therefore, the matter is remanded to the adjudicating authority only for the limited purpose of quantification of the Service Tax demand for the normal period of limitation and for excluding the sand mining activity undertaken from the scope of Cargo Handling Service. The appeal is disposed of in the above terms. It is seen that all the cases involving handling of coal in the coalaries have been decided in favor of revenue on common grounds by holding the services to be classifiable as cargo handling services and there was no contrary view. In case of three of the appellants (handling coal in the mines), the decision has been taken by the Honble High Court of Orissa and in two cases of the coal handlers, the decision has been taken by the Tribunal relying on the decision of Honble High Court of Orissa. From the above orders it is clear that in case of coal handlers listed as A(i) to A(v) in first para there is no contrary view. All the orders are aligned to the views expressed by the Honble High Court of Orissa order dated 25.2.2011.
3 It is noticed that in case of decisions in respect of Packers, namely ITW India Ltd two contrary orders were passed by CESTAT. In one case the Hon High Court of AP has upheld the order of CESTAT. Therefore, in case of packers, there were two orders before the Hon Supreme Court, one of Hon High Court of AP and another of Tribunal (Kolkatta).
i) In case of ITW INDIA LTD. the Kolkatta bench of tribunal passed an order as reported in 2007 (8) S.T.R. 490 (Tri. - Kolkata). In the said order the tribunal observed as under
2.?The Learned Advocate appearing for the Appellants states that the Appellants are engaged in the business of material handling equipment and parts thereof and they also carry out activities like unitisation, straping, packeting or packing, the customers goods at their premises or sites. For the activities carried on by the Appellants in the premises of M/s. Tata Refractories Ltd., Belpahar they have been asked to take Service Tax Registration and under the impugned orders demand of Service Tax has been confirmed against them and penalty has been imposed holding that the Appellants have provided Cargo Handling Service.
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5.?After considering the submissions made from both the sides we find that according to the definition in Section 65(21) of the Finance Act, 1994 the cargo handling service means -
(i) Loading, unloading, packing or unpacking of cargo, and includes -
(ii) Cargo handling services provided for freight in special containers or for non-containerised freight,
(iii) Services provided by a container freight terminal or any other freight terminal and
(iv) Cargo handling service incidental to freight.
5.1?The definition applies to all modes of transport. The only exception provided in the definition is handling of export cargo, passenger baggage and mere transportation of goods.
5.2?In the cited decision in M/s. S.B. Construction Co. (cited supra), the Honble High Court of Rajasthan has held as follows :-
10.?In the instant case, the coal is handled/moved from railway wagons to the site of Thermal Power Station with the aid of wagon tippling system to be fed in the boiler bunkers through conveyor system. It is evident that handling of the coal is done through wagon tippling system or conveyor system, they are mechanical devices and no motor vehicle is involved in the said handling. The clarification made by the CBEC also supports the petitioners contention. It clearly appears that the Service Tax has been levied under the Cargo Handling, on such services which undertakes the activities of packing, unpacking, loading, unloading of goods to be transported by any means of transportation namely truck, rail, ship or aircraft. In the instant case, the service provided by the petitioner Firm under the contract is distinct i.e. transporting coal from wagons to Thermal Power Station by conveyor belt and not by any means of transportation. Thus, we are of the view that the service rendered by the petitioner under the subject contract does not fall under the ambit of Cargo Handling Services and as such it is not liable to pay the service tax.
5.3?The learned Advocate states that in the case decided by the Honble Rajasthan High Court, the coal was initially carried by railway wagon to the rail head and then to the site of Thermal Power Station with the help of wagon tippling system to be fed in the boiler bunkers through conveyor system. He states that since in that case, the Honble High Court has held that the activity was not coming under the scope of cargo handling service, in the present case though the goods packed by the Appellants are to be moved by transport subsequently, the same should not be covered under the cargo handling service. With great respect, we note that the Honble Rajasthan High Court has considered un-loading of the coal by the wagon tippling system and thereafter the coal was transported by conveyor belt and not by any other means of transportation. Hence, the ratio of the decision based on such consideration will apply to a similar case where the goods are transported by conveyor belt etc. and not by employing any other means of transportation such as truck, rail etc. There is no finding by the Honble High Court on the fact that coal was initially moved by rail. The cited decision is entirely based on a consideration of the question that subsequent movement of the coal from the wagons to the Thermal Power Stations was by means other than employing one of the usual means of transportation such as ship, rail, aircraft or truck. Hence, we are unable to accept the prayer by the Learned Advocate that the ratio of the cited decision should be applied to the case of the Appellants where the goods have been packed for subsequent transportation by truck/rail. The learned Advocate fairly admits that the decision of the Honble High Court of Rajasthan is silent in regard to the initial movement of the coal by rail.
5.4?We find that the expression cargo handling service covers packing of cargo for all modes of transport and since the Appellants have undertaken the activity of packing etc. to facilitate subsequent transport of the cargo, we are unable to accept their plea that they are not covered under the scope of cargo handling service. The learned Advocate also made an attempt to argue that what was packed by the Appellant was not cargo, but it became cargo as a result of packing. We are of the view that the expression packing of cargo is wide enough to cover the activities undertaken by the Appellants such as unitising, straping, packeting or packing the impugned goods into cargo for subsequent movement by trucks and/or rail. We also take note of the learned Advocates fair submission that nothing more is required to be done to the cargo before the same is transported and hence we have no hesitation in holding that the Appellants are engaged in packing of cargo for transport and hence they are squarely covered under the definition cargo handling service for the impugned period and hence they are liable to pay the service tax as held by the authorities below.
5.5?Learned Advocate states that part of the cargo was meant for export and hence by definition the same is required to be excluded from the ambit of levy of service tax. We find merit in this submission of the learned Advocate.
5.6?The learned Advocate also states that since the issue involved relates to classification of the impugned service, imposition of penalty on the Appellants is not justified. Considering the fact that the levy on cargo handling service was a new tax, we are of the view that a lenient consideration in regard to imposition of penalty is called for.
5.7?In view of our findings as above, we hold that the activities of the Appellants is taxable as cargo handling service. However, we set aside the impugned orders and remand the matter to the original authority for the limited purpose of excluding the cargo handling service provided by the Appellant in respect of export cargo and for re-determing the tax payable thereafter. As regards the penalties imposed, we take a lenient view and set aside the same. All the three Appeals are disposed off in the above terms. The Cross Objection also stands disposed of.
ii) In case of ITW INDIA LTD. the Bangalore bench of tribunal passed an order in respect of five appeals. The said order was upheld by Hon High Court of AP. In Tribunal three appeals were filed by ITW INDIA LTD. in respect of demand of service tax in respect of services provided. One appeal was filed by ITW INDIA LTD. against remand of refund claim and another was filed by revenue in review proceedings against allowing the refund. The tribunal in its order reported in 2009 (14) S.T.R. 826 (Tri. - Bang.) observed as follows
3.?The Revenue proceeded against the appellants by issue of show cause notices. According to the Revenue, the activities undertaken by the appellants, M/s. ITW India Ltd., namely packaging unitization, strapping, loading of coils, seals, attending improper straps and seal feed and offline strapping are for transportation by any means of transport. The activity carried out by the assessee not only includes packaging but also loading of coils which comes under the definition of cargo handling service only. Thus the activity carried out by the assessee falls under the category of cargo handling service only and not under the category of packaging service. Therefore the main issue to be decided in all these appeals is the category of taxable service for which the activities of the appellants would pertain. We have already enumerated the activities as given in the show cause notices, above. That point is not in dispute. According to the appellants, the activity undertaken by them would not amount to cargo handling services. They are simply packaging services which were taxable only with effect from 16th June 2005. So the issue to be decided is the nature of the services rendered by the appellants.
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6.?The learned Senior Departmental Representative referred to the decision of Kolkota Tribunal in the appellants own case reported in 2007 (8) S.T.R. 490 wherein it was held that the appellants are providing cargo handling service. She submitted that the ratio of the cited judgment is clearly applicable to the facts of the present case and therefore, requested the Bench to bound to follow the same.
7.?The learned Counsel submitted that Kolkata Benchs decision, even though it is in the partys own case, is distinguishable in view of the certain factors. The Tribunal, according to him, has not examined whether the appellants can in the first place be at all considered as a cargo handling agency. The Tribunal has not considered the fact that only after the goods are packed, they become cargo and after they become cargo, the appellants do not handle the same which is what is required in the terms of the definition. It was also stated that the Tribunal has not considered that the appellants do not undertake transportation of the cargo which is the test laid down by the Rajasthan High Court in the case of S.B. Construction Company v. U.O.I. [2006 (4) S.T.R. 545 (Raj.)]. In fact the Tribunal notes that the goods are packed for transport but fails to examine that the next activity of transportation is also required to be done by a cargo handling agency. The Tribunal has not given any finding whether the appellants are specifically covered under the packing service which has come into effect from 16-6-2005 and how the appellants could be covered for the same activity under two different categories. It was further submitted that the same Bench of Kolkata Tribunal in the matter of M/s. B.K. Thakkar v. CCE & Cus., Bhubaneshwar [2008 (9) S.T.R. 542 (Tribunal) = 2008-TIOL-148-CESTAT-KOL] has taken a different view in respect of the activities of loading and unloading of iron ore.
8.?It was also urged that with effect from 16 June 2005, the appellant is paying service tax under the packaging service. The packaging activity is generally understood as the activity of bundling, bounding, making parcels putting merchandise/products into containers etc. for commercial handling.
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17.?On a very careful consideration of the entire issue, we find that the activity rendered by the appellants more appropriately can be described as packaging activity, even in terms of the activities which are described in the show cause notices. The appellant is actually doing the strapping of various steel items in the production line in the Steel Companies. It is also seen that they are a part of the manufacturing process and the value of the packaging is included in the assessable value of the goods and Excise duty is paid on the entire value taking into account the charges incurred by the manufacturers for the package. Therefore once the Excise duty is paid on the charges, again the service tax cannot be levied. That apart, on going through the definition of the cargo handling service, it is very clear that the impugned items cannot be considered as cargo. Moreover after packaging the appellant does not undertake the activity of transportation. The definition of the cargo handling service includes various activites and even in terms of the Boards Circular and also the decision of the Honble Rajasthan High Court, it cannot be said that the appellant undertakes the service of cargo handling in the absence of transportation. Even the later amendment has linked cargo handling as service of packaging together with transportation of cargo. From this it is very clear that transportation is also a must in the case of cargo handling. The learned Advocate has rightly distinguished the decision of the Kolkata Bench where several aspects have not been considered by the Tribunal. Once it is held that the activity of the appellant amounts to packaging then it is very clear that it cannot be taxed prior to 16th June 2005 for any other category, because the activity of the packaging rendered by the appellant came into service tax net only with effect from 16-6-2005. Therefore it is very clear that when the service tax is liable only from 16th June 2005 under the taxable category of packaging activity, it could not have been taxed prior to that date. Moreover from the records available, it is seen that there has been no suppression of facts. The different Adjudicating officers took different view and there was existence of several view points. In these circumstances, as the matter is one of interpretation, it cannot be alleged that the appellant suppressed any facts. Therefore the longer period also cannot be invoked. Hence, we do not find any merit in the impugned order which demands service tax on the activity of the appellant under the category of cargo handling service. Therefore it is not correct also to adjust the amount, paid under the category of Business Auxiliary Service for the period prior to 16th June 2005. We also find that the Commissioner has included the value of the export cargo in the demand that is also not correct. As the service tax itself is not payable under the category of cargo handling service, no interest can be demanded and penalty imposed is also not justifiable. In the above circumstances, we have no other option but to allow the appeals. Thus these three appeals are allowed with consequential relief.
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Service Tax Appeal No. 99/2007 and 110/2007
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22.?On a very careful consideration of the entire issue, we find that the party was doing packaging activity. This is brought out in the Order-in-Appeal. The packaging activity came under the service tax net only with effect from 16th June 2005. Therefore the Commissioner (Appeal) was correct in holding the view that prior to that date whatever tax was paid under any of the category is liable to be refunded. In any case, the appellants have also shown evidence to the effect that the tax paid by them under the category of Business Auxiliary Services was not passed on to their customers. In these circumstances, there is no need for further verification of the unjust enrichment aspect during the relevant period. We agree with the learned Commissioner (Appeals) that the appellants are not at all liable to pay any service tax under any other category because only with effect from 16th June 2005, they are liable to pay service tax under the category of packaging service. In view of this position, we allow the partys appeal and reject the Revenues appeal.
Thus in the case involving ITW India Ltd., there are two contrary decisions, one of Kolkatta bench of Tribunal and another by Hon High Court of AP (upholding decision of the Bangalore bench of Tribunal). The decision of Bangalore bench of Tribunal was passed by distinguishing the decision of Kolkatta bench of Tribunal. The dispute in these cases pertain to classification of services provided. The alternate classification being contested in the two cases of ITW India Ltd., were cargo handling services and packaging services. It can be seen that the appeals before the Hon Supreme Court were against a decision of High court and a decision of Tribunal. The two different authorities have taken a contrary view.
4.1 It can be seen from the analysis in para 2 and 3 above that there are contrary decisions of tribunal only in case of packers namely, ITW India Ltd. There is no such contrary view in case of coal handlers (listed in first para as A(i) to A(v)). In fact all the decisions under challenge by coal handlers follow a common line of argument. All the cases of Coal Handlers are either the result of, or are following, the decision of the Honble High Court of Orissa dated 25/02/2011 (as reported in 2011(24)STR-395). This decision was given in the case of three coal handlers listed as A(i), A(ii) and A(iii) above. In case of other two coal handlers listed as A(iv) and A(v) the tribunal follows the Honble High Court of Orissa order dated 25/02/2011. In view of above it is clear that the matters relating to the coal handlers, not being contrary, do not appear to have been remanded to the CESTAT.
4.1 In case of Packers the decision of CESTAT (Bangalore) has been upheld by Hon High Court of AP and therefore merged with it. It would appear that the correct facts were not presented before the Hon Supreme Court. The contrary views in the cases listed before the Hon Supreme Court was only between the decision of Hon High Court of AP and that of Kolkatta bench Tribunal, and that too only in case of Packers. There are no two decisions of CESTAT which were before the Hon Supreme Court and which were contrary to each other. In these circumstances the contesting parties are advised to approach the Hon Supreme Court, as to the scope of the issues for resolution by the Tribunal.
5. The matters are adjourned, to be heard at a later date.
(Pronounced in Court on ) (S.S.Garg) (Raju) (G Raghuram) Member (Judicial) Member (Technical) President pj 1 17 Appeal Nos.ST/116&117/08, EDM/806/04, STDM/06/06, ST/14 to 19/09, ST110/07, ST/47/08, ST/62, 71 & 99/07