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Issues involved: Classification of services u/s 65(105)(zza) and 65(105)(zzm), applicability of exemption to export cargo, time limitation for demand u/s 65(105)(zr), liability for service tax on cargo handling services.
Classification of storage and warehousing services: The Commissioner upheld the classification of storage and warehousing services u/s 65(105)(zza) based on the charges collected for terminal storage, demurrage, and the wide definition of storage activities. It was noted that demurrage charges were linked to storage charges, and the exemption for export cargo only applied to specific activities like loading, unloading, packing, and unpacking. Classification of airport services: Unitization and screening services were classified under airport services u/s 65(105)(zzm) as they were deemed unrelated to traditional cargo handling activities. Screening was described as necessary for hazardous material detection, while unitization aimed to optimize cargo packaging for efficient loading onto flights by airline staff. Exemption for export cargo: The appellant contended that all services provided for export cargo fell under cargo handling services, which was not accepted initially. However, considering a Board Circular and the relevant time period, the Tribunal found that the appellant could have genuinely believed in the exemption for export cargo services. The show cause notice issued beyond the normal limitation period was deemed prima facie inapplicable, leading to a waiver of pre-deposit and a stay on recovery during the appeal. Liability for service tax: The Tribunal acknowledged the appellant's compliance with service tax liabilities for imported cargo but emphasized the bona fide belief in the exemption for export cargo services during the relevant period. It was noted that services provided for export cargo were inherently related and ancillary to the cargo handling services, justifying the waiver of pre-deposit and a stay on recovery pending the appeal.
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