2018 (12) TMI 952 - AT - Service Tax

Interpretation of statute - Cargo Handling Service - scope of the service - Held that - Admittedly, the word cargo is not defined under the Act. The discussion of the adjudicating authority in the Order-in-Original makes it clear that as per the work order issued by M/s. CCCL to the assessee, the work assigned was handling of materials as per directions of M/s. CCCL within the factory premises of M/s. CCCL for loading raw materials such as coal and slag on to tippers for transportation. The above activity undertaken by the assessee is clearly on the goods as part of the production process. The impugned service in the case on hand will not fall within the fold of Cargo handling Service since admittedly, the assessee was only assisting in loading raw materials and is not involved in the transportation of any final products as transportation is a must in the case of Cargo Handling. The mere supply of men and materials per se coupled with the scope of work which limited to the work assigned by M/s. CCCL inside the factory premises, cannot be considered to be a service under Section 65 (23) ibid - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of services under 'Cargo Handling Services' under Section 65 (23) of the Finance Act, 1994.

In this judgment by the Appellate Tribunal CESTAT Chennai, the issue revolves around the classification of services provided by the assessee as 'Cargo Handling Services' under Section 65 (23) of the Finance Act, 1994. The dispute arises from the handling of raw materials like coal and slag at the factory premises of a company, where the assessee is paid pay-loader hire charges. The Revenue issued a Show Cause Notice proposing to classify the services under 'Cargo Handling Services,' which was confirmed by the adjudicating authority. The Commissioner of Central Excise (Appeals) later held that the transportation activity essential to Cargo Handling Service was absent in this case, leading to the unsustainability of the classification and service tax demand. The appeal by the Revenue challenges this decision.

The Tribunal analyzed the definition of 'Cargo Handling Service' under Section 65 (23) of the Act, which includes loading, unloading, packing, or unpacking of cargo. The definition has two parts: 'means' and 'includes.' The 'includes' part encompasses cargo handling specifically and handling of cargo or goods. The Tribunal noted that the word 'cargo' is not defined in the Act. It observed that the impugned service did not fall within the definition of Cargo Handling Service as the assessee was only involved in loading raw materials and not in the transportation of final products, which is essential for Cargo Handling. The Tribunal also emphasized that the mere supply of men and materials within the factory premises cannot be considered a service under the relevant section.

Moreover, the Tribunal referred to the decision of the Bangalore Bench of the Tribunal in a similar case, which was upheld by the Hon'ble High Court of Andhra Pradesh. Based on these considerations, the Tribunal dismissed the Revenue's appeal, upholding the Order of the Commissioner (Appeals). The judgment was pronounced on 14.12.2018.