9911796707
TMI Blog2023 (11) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... s (APS) and Storage and Warehousing Services (SWS)? Unloading/Acceptance of cargo from consignor - Checking label marks and number - Taking gross weight and volumetric weight - Facilitating Customs examination of cargo in case of international cargo which may involve packing and un-packing - After examination receiving Let Export Order from the Customs - Again checking marks and labels and other documents against AWB and acknowledging the same to agent - Loading cargo in trolleys for screening - collection of Terminal Processing Charges as SWS or not? - HELD THAT:- Keeping in view the nature of activities being performed and the charges being collected, it would be relevant to understand the flow of goods and the role of the Appellants in the cargo terminal. It is not disputed that the activities are being performed by the Appellants in the cargo terminal for which they are collecting certain charges either from the exporters/freight forwarders/agents or from the Airlines. It is also not in dispute that the goods in question are cargo and they are intended for loading into Aircraft for transportation. It is also not in dispute that cargo is meant for export. When the cargo is recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cargo only. Screening of cargo through X-Ray machines - Build-up of cargo in pallets for loading on Aircraft, by ground handling company - to be classified under APS or not? - HELD THAT:- It is observed that these are required for safe passage of export cargo in the Aircraft. These are required to be done in terms of certain mandatory requirements and on specific request from Airlines for safe and easy movement of cargo and its loading and unloading in the Aircraft. These two activities are neither charged to the customers using the terminals, nor are these directly related to the activities concerning CHS. Here, the amount is being collected from the Airlines to whom specific services are being provided as per their requirement. The scope of APS as it existed even prior to its amendment in 2010, includes services provided to Airlines as well as for cargo and passenger baggage handling such as security, transit facilities, landing charges, parking charges etc. It is an admitted fact that services are provided to the Airlines on their specific request and not at the behest of the exporter/freight forwarder/agent. Therefore, these services appear to be classifiable under the categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quiry, the Department felt that various services provided by the Appellant were partly falling under SWS and partly under APS and not under CHS, as claimed by them. In view of the same, SCN dated 02.04.2012 was issued demanding service tax under APS and SWS. The breakup is as under: Service Tax demanded for the period March 2008 to June 2010 (in Rs.) On Services Under proposed category Rs. 1,88,64,466/- Screening & Unitization/Build-up Airport Services Rs. 1,07,35,260/- Terminal Storage-Processing Charges Storage & Warehouse Services 3. The Adjudicating Authority, after going through detailed submissions made by the Appellants, came to the conclusion that activities and services rendered by the Appellants were not in the nature of CHS, rather these were in the nature of APS and SWS. Accordingly, the classification proposed in the SCN was held to be appropriate, and entire demand was confirmed with interest and equal penalty under Sec 78 of the Finance Act, 1994 was also imposed. 4. The Appellant is before this Tribunal in Appeal against the said impugned Order-in-Original dated 03.05.2013. 5. The core issue to be decided is whether in the given factual matrix and the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the said services, they are collecting 'Terminal processing charges' and 'Demurrage charges' and therefore, having regard to Para 7 of the Board's Circular dated 01.08.2002, the Terminal storage-processing charges and export demurrage charges collected by the Appellant are classifiable under SWS. As regards APS, he relied on Board Circular No. 80/10/2004-ST dated 17.09.2004 and came to the conclusion that services provided to Airlines as well as cargo handling i.e., unitization/build-up and screening of export cargo, was rightly classifiable under APS. He, therefore, confirmed the demand by upholding the classifications proposed in the SCN. 8. For correct appreciation of proper classification of services in respect of activities undertaken by the Appellant, the scope of rival services contended by the Appellant and the Department are reproduced below: i) Cargo Handling Service (Section 65(23)) (substituted w.e.f 16.5.08): 'Cargo Handling Service' (which became taxable w.e.f. 16.8.2002) means loading, unloading, packing or unpacking of cargo and includes,- (a) cargo handling services provided for freight in special containers or for non-containerised freight, services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a combination of two different services viz., SWS and APS. They have mainly contended that they are providing full scope of CHS encompassing physical handling as well as documentation services and certain other services such as general supervision, tracing any irregularity management, customs interface, etc. On receipt of cargo which is meant to be exported, the Appellant receives the same in the terminal storage area, which is meant for processing (customs clearance) of cargo in designated area, and thereafter the processed cargo is screened after which the same is built-up together (unitized) consignment wise, and loaded to the Aircraft. 10. They are also charging demurrage for clearance, beyond 72 Hrs only in and their services are akin to services undertaken by any freight terminal, for any mode of transport. According to the Appellant, the definition of CHS under Sec 65(105)(zr) is an inclusive definition. They also submitted that learned Commissioner, while adjudicating, has erroneously held them to be 'custodian' of the goods, whereas they are not licensed as custodian of goods. They are storing the goods not as custodian but as 'cargo handling agents' for the Airport, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azardous, perishable, live animals, valuables and express cargo, etc., and License fee." 14. For the 'demurrage charges', the Department contended that, Appellant will also fall under SWS, as in this case there is storage involved. The Department felt that certain services being provided by the Appellants are clearly falling under APS. Keeping in view the Board Circular dated 10.09.2004, the Department felt that Unitization and Screening/X-ray service, has got nothing to do with CHS and in fact, they are classifiable as APS, as the said services include cargo handling, transit facilities, security service, etc. Further, these services are provided after cargo is stored, moved, screened, readied and unitized, so as to facilitate easy lifting by Airlines. In fact from 01.07.2010, any service provided by any person within an airport, shall be classified under APS, notwithstanding anything contained in Sec 65A. 15. Before the issue of classification is discussed, keeping in view the nature of activities being performed and the charges being collected, it would be relevant to understand the flow of goods and the role of the Appellants in the cargo terminal. It is not disputed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that, event of levy under CHS arises when service relating to or in relation to handling of cargo is provided by Cargo Handling Agency, irrespective of the mode of the transport used for movement of such cargo. It is also observed that the following activities are contemplated to be taxed as CHS. "4.5 Combined reading of provisions of Sections 65(105)(zr) and 65(23) of the Act throw light that cargo handling agencies are taxable entities. Cargo handling service provided by such entities attract the levy of service tax. Section 65(23) has a wide amplitude and has brought all like nature activities to its fold expressly and by inclusion of such like nature activities under the class 'cargo handling services'. However classification of service under this category is subject to two exceptions/exclusions: viz.(1) handling of export cargo or passenger baggage and (2) mere transportation of goods. These two activities are beyond the scope of such class from taxation for rationale behind them. Accordingly, cargo handling services provided in respect of domestic cargo only are liable to tax. Event of levy arises when service relating to or in relation to handling of cargo is provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the category of CHS. This case was in the context of the Appellants maintaining air cargo terminal where 'air cargo' for export and passenger baggage for transport by air, were brought and thereafter unloaded and transported to the plane. The Appellants were providing terminal facility for X-raying, security check and completion of customs formalities and short duration retention of goods for transit to the plane. The relevant paras are reproduced below: "4. Admittedly Section 65(23) under which cargo handling service is brought under service tax, specifically excludes export cargo and passenger baggage from liability. Therefore, no service tax is payable for cargo handling service in respect of export cargo and passenger baggage. The appellant's specific case is that terminal charges collected by them for export cargo and passenger baggage falls within the description "cargo handling services" and so much so, by virtue of the exemption available to these two items under Section 65(23), there is no justification for the department to levy service tax by treating the cargo handling service as a "storage and warehousing service". Standing Counsel brought to our notice the admissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided in the terminal building for security check, Xraying and for completion of customs formalities. The department can levy service tax only if any part of the charges levied by the appellant falls within the description of "storage and warehousing" referred to in Section 65(102) of the Act. Storage and warehousing obviously is storing the goods for a duration of time providing safe custody to goods. Nobody sends the cargo or passenger baggage to appellant's terminal building for storage because goods are sent there only for shipment by air. It so happens that there is a time lag between the arrival of the goods in appellant's terminal and the actual despatch of goods by air. The short duration of time taken for unloading, X-raying, completion of customs formalities and time taken for unloading and transport to the plane cannot be said to be time of storage or warehousing of goods. Necessarily goods will have to wait until the Airlines arranges flight and space in the aircraft for lifting the cargo. A reasonable time necessarily has to be provided by the appellant for the Airlines to lift the goods after arrival at their terminal. The appellant's case is that considering the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of just charging and naming the charges as 'terminal charges' cannot become SWS, in view of the fact that the terminal where the export cargo is stored is not meant principally for storage and warehousing, rather for processing of cargo before it is loaded on aircraft for export. In fact there are specific storage and warehouse facility, either public or private, under customs provisions itself, which can be inside cargo terminal or outside, where the goods can be stored subject to certain condition(s). In this case it has not been alleged that they are operating any such warehouse. Therefore, the activities being provided by the Appellant for a consideration, both in the name of terminal charges as well as demurrage charges, would be covered within the scope of CHS. The scope of rival service i.e., SWS would not be an appropriate classification as contended by the Revenue. 20. In view of the analysis of their actual activities and the scope of the said services, the Revenue has primarily relied on notification issued by Airport Authority of India dated 13.06.2003, wherein, they have explained the meaning of 'terminal storage and processing charges'. Merely by resorting to what th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is an admitted fact that services are provided to the Airlines on their specific request and not at the behest of the exporter/freight forwarder/agent. Therefore, these services appear to be classifiable under the category of APS. 23. However, we find that prior to 01.07.2010, when proviso was added to Sec 65(105)(zzm), Airport service is read as - service provided to any person, by Airport authority or by any other person, in any airport or civil enclave. Further, prior to 01.07.2010, we find that Cargo Handling service as defined under Sec 65(23) of the Finance Act includes also activities like loading, packing in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling service incidental to freight, but does not include handling of Export cargo or passenger baggage or mere transportation of goods. We find that the activities as aforementioned in S.No. 8 & 9 are also squarely covered under the definition of Cargo Handling service. We further find that prior to introduction of proviso w.e.f. 01.07.2010 in Sec 65(105)(zzm), Sec 65A was applicable, which pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
