2008 (3) TMI 93 - AT - Service Tax

Appellant was actually supplying labour to M/s. Hindalco and the scope of their work is limited to the work assigned to them by M/s. Hindalco inside the factory premises - revenue has not produced the contract and shown the relevant provisions to show that the appellants were coming within the ambit of cargo handling service - no evidence to show that the appellant had actually handled the cargo liability doesn t arise under Cargo Handling Service assessee s appeal allowed

Summary

Issues:
Appeal against Order-in-Appeal No 316/2005-CE & Order-in-Appeal 67/07-CE, passed by the Commissioner of Central Excise (Appeals) Mangalore regarding cargo handling services and service tax liability.

Analysis:
The case involved an appeal by M/s. S.N. Uppar & Co, Belgaum against Order-in-Appeal No 316/2005-CE, while revenue appealed against Order-in-Appeal 67/07-CE. Both orders pertained to the same issue of cargo handling services and service tax liability. The Tribunal decided to pass a common order considering both appeals. The revenue alleged that the assessee did not comply with service tax liability for rendering cargo handling services to M/s. INDAL. The Original Authority confirmed a demand of Rs. 22,58,219/- with penalties. Another order demanded service tax of Rs. 43,00,288/- for a different period, with penalties imposed. The Commissioner (Appeals) set aside the later order and directed a de novo order based on the Tribunal's decision on the first appeal. The issue revolved around whether the appellants' activities fell under cargo handling services.

The party contended that they were supplying labor to M/s. Hindalco and not engaged in cargo handling services. They argued that they fell outside the definition of cargo handling services and cited a Board Circular to support their position. The definition of cargo handling services included loading, unloading, and packing of cargo but excluded handling of export cargo or passenger baggage. The appellant claimed they were only involved in internal loading, unloading, and packing of semi-finished goods within the factory premises, thus not providing cargo handling services. The Tribunal found that the appellant supplied labor within the factory premises and did not handle cargo as defined, concluding that the impugned order lacked merit.

The Tribunal noted that the revenue failed to demonstrate through contracts or evidence that the appellants were engaged in cargo handling services. Case laws were cited where supplying labor did not constitute cargo handling services. The Tribunal emphasized that the burden was on the revenue to prove the appellants' activities aligned with the definition of cargo handling services, which was not done. As the laborers only handled semi-finished goods within the factory based on instructions from M/s. Hindalco, the Tribunal held that this did not amount to cargo handling services. Consequently, the impugned order-in-appeal upholding the order-in-original was set aside, and both the party's appeal and revenue's appeal were decided in favor of the party.

In conclusion, the Tribunal ruled in favor of M/s. S.N. Uppar & Co, Belgaum, rejecting the revenue's appeal regarding cargo handling services and service tax liability, emphasizing the distinction between labor supply and cargo handling services based on the specific activities carried out by the appellants within the factory premises.