2018 (12) TMI 169 - AT - Service Tax

Refund of Service tax paid - Cargo Handling Services or port services - export of goods or not - Section 11B of the Central Excise Act, 1944 - Held that - The activity carried out by Gopalpur Port for the appellant is in the nature of Cargo Handling Service and not port service. Further, since these activities deal with export cargo, there is no liability for payment of service tax - the service tax paid is liable to be refunded. The jurisdictional Assistant Commissioner/Deputy Commissioner is ordered to pay refund to the appellant only after due verification whether such refund has been claimed/paid to Gopalpur Port - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to Order-in-Appeal regarding service tax refund for export cargo handling service.

Analysis:
The appellant, a rare earths manufacturer, exported Ilmenite through Gopalpur Port, facing a dispute over service tax charged by the port. Initially, a refund was claimed under Export of Services Rules, 2005, later amended under Section 11B of the Central Excise Act, 1944, for service tax paid under "Cargo Handling Service." The appellant contended that the service tax was erroneously levied by Gopalpur Port for export cargo handling. Both original and appellate authorities rejected the refund claims, leading to the present appeal.

The appellant argued that the activities with Gopalpur Port constituted "Cargo Handling Service," excluding export cargo from service tax liability. The appellant claimed refund under Section 11B within the specified time limit, emphasizing non-availment of cenvat credit. The Revenue contended that the predominant stevedoring activity within the port area made it liable for service tax under "port services," justifying the refund rejection.

Upon review, it was found that Gopalpur Port charged service tax for export cargo handling, contrary to the definition of "Cargo Handling Service" excluding export cargo. Referring to precedent, the Tribunal concluded that service tax liability does not apply to export transactions involving cargo handling. The activity by Gopalpur Port was classified as Cargo Handling Service, not port service, warranting a refund of the service tax paid, subject to verification of non-claim by Gopalpur Port.

In the final decision, the Tribunal held that service tax was not applicable to the activities by Gopalpur Port for the appellant due to the nature of Cargo Handling Service involving export cargo. The jurisdictional authorities were directed to verify the non-claim of service tax refund by Gopalpur Port before refunding the amount to the appellant. Consequently, the appeal was allowed on these grounds.