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TMI Blog2019 (2) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... rage and Warehousing Services - Held that:- The assessee has conceded that they are liable to pay service tax under Storage and Warehousing Services. The demand under this category is therefore upheld. Demand of 33,28,912/- under the category of reimbursable expenses - Held that:- An amount of 1,13,954/- has been confirmed under this category. Ld. Counsel has submitted that the assessee is not contesting the amount confirmed under this category and therefore, the same is upheld. Composite Penalty u/s 78 - Held that:- The assessee has put forward reasonable cause for non-payment of service tax under this category and therefore, the penalty under Section 78 requires to be set aside by invoking Section 80 of the Finance Act, 1994. Appeal allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... he contractor who performs the service of Maintenance and Repair on the containers and also discharges the service tax on Maintenance and Repair Services. The assessee having not carried out any Maintenance and Repair Service, is not liable to pay service tax under this category. The amount that is billed by the assessee for Maintenance and Repair of the containers is only a margin, which is the profit made by the assessee. This is not a consideration for the service since the service of Maintenance and Repair is performed only by the contractor, who has discharged the service tax on the said activities. 3.1.3 He adverted to a sample invoice issued by M/s. Agalya Engineering, Chennai to the assessee wherein ₹ 92,730.88/- has been raised towards container repair charges for the month of 14.07.2007. This includes material cost as well as labour cost besides sales tax and service tax. On 14.08.2007, the assessee raised bill on M/s. Goodrich Maritime P. Ltd., Chennai, towards washing and repair of empty containers, which shows an amount of ₹ 1,32,488.46/-. It is explained by the Ld. Counsel that the amount so billed by the assessee is margin of profit and not the considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .S.T.L. 401 (S.C.) to argue that the said issue whether service tax is leviable on reimbursable expenses is settled by the Hon'ble Apex Court in the said decision, where the issue is held in favour of assessee. 3.4 Ld. Counsel also prayed to set aside the penalties imposed. 4.1 Ld. AR Shri. A. Cletus appeared and argued the matter on behalf of the Department. He submitted that the containers are sent to the assessee's Container Freight Station (CFS) for de-stuffing. After de-stuffing the cargo, the assessee undertakes the repair work of those containers which are damaged and needs repair, as approved by Steamer Liner. After cleaning and repair, the containers are moved back to the steamers (liners). This process involves initial survey of the containers and also estimation as to the repair work to be done. After obtaining approval of the repair works by the liner, the repair works are done. After completion of these repair works, invoices are raised by the sub-contractors along with supporting documents for payment and the assessee, in turn, raises bills on the liners. It can be seen that the assessee engages contractors to perform the work of Maintenance and Repair of the contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has billed a consolidated sum to the customer, which includes material costs as well as taxes paid by the contractor. The quantification of demand under this category is therefore incorrect and requires to be revised. For the limited purpose of requantification, the matter is remanded to the adjudicating authority, who shall give an opportunity to the assessee to furnish necessary documents for requantification of the demand under this category i.e., Maintenance and Repair of containers. In such de novo proceedings, the adjudicating authority is directed to take into account the ratio laid down by the Hon'ble Apex Court in the case of M/s. Safety Retreading Co. (P) Ltd. (supra) relied upon by the Ld. Advocate. 6.4.2 The assessee has alternatively argued in regard to the penalties imposed. We note even from the reply of the assessee dated 14.11.2008 to the Show Cause Notice that they have taken shelter under a misinterpretation of the definition of "Maintenance and Repair Service" in Section 65(64) of the Finance Act, 1994, and in particular, the amendment caused with effect from 15.06.2005. This being so, we also hold that no penalty is imposable in respect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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