2011 (11) TMI 424 - AT - Service Tax

Application for refund - Notification No. 41/07-S.T., dated 6-10-2007 - The claim was relating to service tax paid on port services and other port services charged to service tax under Section 65(105)(zn) and 65(105)(zzl) and transportation of goods by road from factory to ICD and transportation of goods by rail from ICD to port of export - Tribunal in the case of Western Agencies v. C.C.E. (2011 -TMI - 206087 - CESTAT, CHENNAI (LB)) holding that all the services provided within the port area in relation to vessels and goods will be classifiable as port services and therefore, the order of the Commissioner (Appeals) is not sustainable - Decided in favor of the assessee - condition of pre deposit waived.

Summary

Issues:
1. Refund claim of accumulated cenvat credit on service tax paid in input services used in manufacturing processes.
2. Discrepancy in correlating transportation of goods to exported goods for refund claim.
3. Classification of various charges under 'port services' for refund claim.
4. Denial of refund claim for GTA services.
5. Interpretation of 'port services' for refund eligibility.

Issue 1:
The appellants manufactured excisable goods and exported them, availing credit on service tax paid in input services. They claimed a refund of accumulated cenvat credit as per Notification No. 41/07-S.T. for the period April, 9 to June, 09. The refund claim was related to service tax paid on "port services," "other port services," transportation of goods by road from factory to ICD, and transportation of goods by rail from ICD to the port of export. The Revenue contended that the credit for transportation of goods could not be linked to exported goods due to discrepancies in descriptions and marks on transport documents and shipping bills.

Issue 2:
The adjudicating authority relied on a previous decision and sanctioned a partial refund but denied the refund claim for GTA services. The Revenue appealed the decision, arguing that certain services like sampling, analysis, cargo handling, storage, terminal handling, and bill of lading issuance could not be classified under port services. The Commissioner (Appeals) agreed with the Revenue, ordering the recovery of a specific amount from the appellants, leading to the filing of the current appeal.

Issue 3:
The appellants cited a decision of the Larger Bench of the Tribunal in the case of Western Agency v. C.C.E., which classified all services provided within the port area in relation to vessels and goods as "port services." They argued that the order of the Commissioner (Appeals) was not sustainable based on this precedent.

Analysis:
Upon reviewing the Larger Bench's decision, it was established that for a service to be classified as a port service, the service provider need not act as an agent of the port. The key criteria were that the service should be provided within the port area and be related to goods or vessels. The Tribunal found that the services for which the refund was sanctioned met these criteria, thereby waiving the requirement of any pre-deposit for admission of the appeal and staying the collection of dues pending the appeal process. The Tribunal's decision was pronounced on 16-11-2011.