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TMI Blog2013 (12) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... rage and transportation of crude oil from Bombay High. From the agreement for charter hire, it appeared that the vessel is to be used for at a particular place or site for operation and service, which indicated that the vessel is stationary and primarily not used for voyage/transport of oil. The vessel is sought to be moored to the ONGC rig and act as a mother vessel receiving oil from the rig and pumping it to other daughter vessels which do actual transporting. The vessels used as mother vessel is required to carry out ship to ship transfer of cargo to daughter vessel. Therefore, the department was of the view that the activity undertaken by SCI in charter hiring the mother vessel was primarily for the purpose of storage of crude oil at Bombay High and the transportation was only an incidental function to the primary function of storage. Accordingly, in respect of ten such mother vessels, the department sought to classify the services rendered under the category of "Storage and Warehousing Services". The department sought to demand service tax amount of Rs. 26,78,75,717/- comprising service tax demand amounting to Rs. 25,04,29,302/- during the period October, 2002 to December, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls on charter hire basis to ONGC to be used for transportation of crude from the oil wells to the various ports and the primary function of the said vessel is transportation of crude oil well to the ports. Therefore, the activity undertaken by the appellant is not 'Storage and Warehousing Service' but charger hiring of the vessel and they are not liable to discharge any service tax on the said activity under 'Storage and Warehousing Service'. 3.3 The Ld. Counsel also submits that from the deployment of tankers during the period April, 2002 to December, 2007 it can be seen that the tankers have been deployed for a period as short as one day to as high as 110 days and the vessels carrying the crude have sailed off to various ports in India from Bombay High carrying the crude produced therein. As per the Ministry letter No. 334/1/2008-TRU dated 29/02/2008, the activity of charter hiring of vessels for offshore operations would come under "supply of tangible goods for use service". In para 4.4.2 of the said Circular it is stated as follows: "Excavators, wheel loaders, dump trucks, crawler carriers, compaction equipment, cranes, etc., offshore construction vessels and bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was affirmed by the Hon'ble apex Court also. The ratio of the said decision applies squarely to the facts of the present case and accordingly, the impugned demands are not sustainable in law. The appellant is a Government of India undertaking and therefore, cannot be alleged to have indulged in suppression of facts with an intent to evade tax. 3.6 The learned counsel for the appellant also relies on the decision of this Tribunal in the case of Aban Loyd Chiles Offshore Ltd. vs. Commissioner of Service Tax, Chennai wherein it was held that the activity of operations floating storage and offloading unit through which crude oil from the subsea wells is transported to fleet are not covered under the ambit of 'Storage and Warehousing Services' as defined under Section 65(105)(zza). Reliance is also placed on the decision of the Tribunal in the case Karnataka State Beverages Corporation Ltd. vs. Commissioner of Service Tax 2007 (8) STR 481 wherein it was held that when demurrage charges are levied for not lifting the goods within the stipulated period such charges cannot be considered as consideration for the storage of the goods merely because the charges are recorded as storage charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the vessel is for transportation of crude from the place of production i.e. in the High Sea to the refineries in India and not for "storage and warehousing". In the case of Indian National Ship Owners Association (cited supra), the Hon'ble Bombay High Court held that supply of vessels on charter hire basis for offshore operations would merit classification under "supply of tangible goods for use", which activity was brought under the service tax net with effect from 16/05/2008. The clarification issued by the Ministry at the time of introduction of said levy vide Circular No. 334/1/2008-TRU (cited supra) also makes it clear that supply of vessels for offshore operations would be exigible to service tax under the category of "supply of tangible goods for use". 5.2 A similar issue came up for consideration before this Tribunal in the case of Aban Loyd Chiles Offshore Ltd. (supra). In that case the appellant was offering number of units engaged in offshore for drawing crude oil from subsea wells in sea and processes and transfers the processed crude oil through a buoy into a vessel called Floating Storage and Offloading unit through which the crude was further transferred to flee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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