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TMI Blog2024 (7) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... activity undertaken by them does not fall under the category of port service. Reliance placed on the decision of this Tribunal on this issue in case of VELJI P. SONS (AGENCIES) P. LTD. VERSUS COMMISSIONER OF C. EX., BHAVNAGAR [ 2007 (8) TMI 35 - CESTAT, AHMEDABAD] where it was held that ' activities undertaken by the appellant does not fall under the category of Port Services. Thus, the activities under taken by the appellant during the period of demand does not fall under the category of port service - the impugned order set aside - appeal allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C. L. MAHAR, MEMBER (TECHNICAL) Present for the Appellant : Shri Jigar Shah, Advocate and Shri Amber Kumsrawat, Advocate Present for the Respondent: Shri Satypal Singh Vikal , Additional Commissioner (AR) ORDER The brief facts of the matter are that the appellants are engaged in the business of providing steamer agent service, business support service, goods transport agency service and business auxiliary service, etc. and they are registered with the Service Tax Department for the same. During the departmental audit of financial records of the appellant and its principals namely M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant are not authorized by port in any manner to carry out the duties and services provided in relation to vessel or goods but they are getting container loaded /unloaded from the vessels on behalf of their clients. 2.3. The learned Advocate has explained that the activities undertaken by the appellant is primarily of picking of containers from vessels or vehicles and placing the containers on vehicles or vessel and same is called as terminal handling charges. It is the matter of record that the terminal handling charges are paid by the appellant to the port authorities and appellant recovers charges from their respective clients after adding margin of profit on and above charges recovered from them by the port authorities. The difference between the charges paid by the appellant to the port authorities and recovered by them from their clients is the margin of profit and this margin of profit goes to their principals namely M/s. Balaji Shipping (UK) Limited, Gandhidham. 2.4. The learned Advocate has further submitted that port authorities collects charges from shipping lines for terminal handling work and therefore, it is the port authority which charges for terminal handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assenger baggage or mere transportation of goods; At the same time the Central Board of indirect taxes in its Circular No. B11/1/2002 -TRU dated 01.08.2002 has clarified the scope of cargo handling services agenda:- 2. As per clause (21), the term cargo handling service means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and any other service incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of cargo. The taxable service, as per sub-clause (zr) of clause (90), is any service provided, to any person, by a cargo handling agency in relation to cargo handling services. 3. The services which are liable to tax under this category are the services provided by cargo handling agencies who undertake the activity of packing, unpacking, loading and unloading of goods meant to be transported by any means of transportation namely truck, rail, ship or aircraft. Well known examples of cargo handling servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the containers are practically looked after by the appellant they are de facto service provider of these services in India. The only question which needs to be answered by us is whether the activity undertaken by the appellant of engaging port authorities for getting containers of import and export cargo handled by the port authorities fall under the category of port services . From the perusal of facts itself it appears that the terminal handling work of the containers was actually done by the port authorities such as Kandala Port Trust or Mundra International Terminal, etc. and for that they have raised invoice in the name of the appellant. The appellant has further raised invoice after adding margin of profit to their various clients scan copy of the sample invoice is reproduced here below:- From a glance at the above mentioned invoice, it can be seen that container has been handled by M/s. Mundra International Cargo Terminal and the invoice has been raised on the appellant, in this invoice even Service Tax has been charged by the Port Authority namely M/s. Mundra International Cargo Terminal. This very fact makes it clear that actually the service of terminal handling has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the services which the port itself is required to provide as such authorization would make an assessee step into shoes of the Port. Having already observed that such services were not required by the port, any authorization by the Port cannot convert the services into port services. In any case, we find that there is no authorization by the Port to the appellant to conduct the services on his behalf. Licenses issued by the Port authorities cannot be considered as authorization. Such licenses are issued by the Port authorities to all the persons working in the Port to ensure the safety and security of the Port Area and does not confer any power or authority of the Port on the person so issued with the licence. If the licences issued by the Port are taken as authorization, then such licences issued to Stevedores, ship chandlers, labourers, repairers of the vessels etc would also become authorized persons by the Port to render services as Port services. 7. We further note that Section 42 of the Major Port Trusts Act provides for authorization by the Board for vanous services specified by that Port in the Official Gazette. For such authorization if effective, the same shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave not conferred with functional authority as seen in the case of private agencies maintaining container terminal or berths. This difference in functional freedom will bring out clearly the difference between an authorization given under Sec. 42 of MPTA and a license given under regulations under Sec. 123 of MPTA 9. In the light of the foregoing discussions and applying the ratio of law declared by the Tribunal in the case of Homa Engineering Works, we are of firm view that activities undertaken by the appellant does not fall under the category of Port Services. The above decision of this Tribunal has also been affirmed by the Supreme Court as reported under 2009 (13) STR J 131 (SC). 4.5. Similarly, this Tribunal in case of Aspinwall and Company Limited Vs. Commissioner of Central Excise, Mangalore reported 2011 (21) STR 257 (Tribunal-Bang.) 11 . The issue involved in all these cases mainly centres around the classification of the services rendered by the appellants herein. The appellants herein are claiming the classification of their services under the category of Custom House Agents and other services while Revenue seeks to classify these services under Port services . 12 . The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt Services as port has not authorized them to render such services. It is not disputed that the service provider is licensed and permitted to render stevedoring service. Port is a notified area and does not provide free access to general public. For entry into the port premises, Port Trust has specified certain restrictions. Rendering of any service within the port would be possible only with permission or authorization issued by the Port. The service provider has obtained a stevedore licence from the Port Trust, for rendering stevedore service. All the services within the port are either required to be done by port or by persons permitted/authorized by the port. A person who is licenced or authorized to render stevedore service is also authorized to render other allied and ancillary operations as evident from the nature of service rendered by the service provider. The statutory definition under Section 65(82) says that port services means any service rendered by a port or other port or any person authorized by such port or other port, in any manner, in relation to a vessel or goods . So the emphasis here is on the person authorized and not on the service authorized . 30. In the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moving and shifting of goods are not done by NMPT, the service provider performs the above services on the strength of stevedore licence which is nothing but an authorization to enter the port premises and render services. If the service provider was not authorized by the Port to perform the above services, Port Trust would have raised objection or would not have allowed them to perform the services in the port premises other than simple stevedoring (loading unloading) operation. Therefore, it should mean that the above services performed by the service provider are with the explicit approval of port authorities only . 13 . As can be seen from the above reproduced findings of the adjudicating authority, which is more or less the same in all the orders, relies upon two propositions to classify the services rendered by the appellants under Port services viz. (i) that the services are rendered by the appellants within the port area of the new Mangalore Port or Karwar Port and (ii) Section 42(1) of the Major Port Trust Act, 1963 indicates that a Board shall have power to undertake the services, which they can licence to somebody else. At the outset, we may record that an identical issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, the Mumbai Tribunal even held that the Board s circular issued on this behalf is not in accordance with law. Moreover, the appellants have produced a letter from the Mangalore Port Trust which clearly say that the appellants are rendering the services directly and not on behalf of the port. In these circumstances, there is much force in the appellant s contention that services rendered by them would not amount to Port Services . In other words, it would only be Cargo Handling Services . But, the appellants would not come within the ambit of taxation, because in respect of Cargo Handling Services , the cargo in relation to exports are excluded from the purview. Since the appellant is only handling the export cargo, he would not be liable to Service Tax even under the category of Cargo Handling Services . In these circumstances, we do not find any merit in the order of the Commissioner and therefore, we set aside the same and allow the appeal of the appellants with consequential relief. 14 . It can be seen from the above reproduced findings that the Bench had considered the provisions of Section 42 of the Major Port Trust Act and also the definition of the Port service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases before us is also on the ground that the assesses therein were providing services of loading, unloading of import or export of goods from the premises of exporter or importer, terminal handling, drawback processing, etc., within the port area under Licence to function as a Customs House Agent within the port area and hence these activities will fall under the category of Port services . We find that the ratio of the decision of the Tribunal in the case of Velji P. Sons (Agencies) P. Ltd. (supra) would cover the issue in favour of the assessee. With respect, we may reproduce the facts and the ratio therein. 16.1 In the case of Velji P. Sons, the facts were : the assessee therein was rendering the services of hiring of the barges, cranes, forklifts and they were licenced by Gujarat Pipavav Port Limited to carry out such activities. Revenue was of the view that the services rendered by the appellant would relate to goods hiring vessel and hence would fall under the category of port services as defined under Section 65(42) of the Finance Act, 1994. While allowing the appeal filed by the assessee against an order holding that the services rendered by the assessee would fall u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have prior approval of the Central Government and the person so authorized cannot charge any excess payments than the amount specified in the tariff authority for Major Ports, by Notification in the Official Gazette. The licenses issued to the appellant are not governed by the statutory requirement of Section 42 inasmuch as the appellant is free to charge any amount from its customers for the services being provided by it and such collections are not regulated by the Port. In this view of the matter, the licence given to the appellant cannot be held to an authorization. 8. Licence means a permission given for specific purpose; the licence holder cannot be interpreted as having the powers or authority of the person issuing the licence, unless the licence specifically mentions about it. To take a simple analogy the person issued with driving licence, under no stretch of imagination, can be said to be functioning as Road Transport Authority. Authorization may be issued by way of licence, but not all licences are authorizations. Hence, the licences issued by Ports to various agencies (under Sec. 123 of MPTA) should not be confused with the authorization (may be by way of licence) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of the Tribunal in the case of Velji P. Sons (Agencies) P. Ltd. that the facts, of that case and the facts in these cases before us are identical wherein various services were rendered by the appellants herein within the port area. Since the ratio of the judgment of the Velji P. Sons is squarely applicable in this case, the judgment had also having been upheld by the Hon ble Apex Court, the ratio is binding on us. It is also to be noted that the judgment of the Hon ble Supreme Court in the case of Velji P. Sons seems to have been accepted by the Government of India, which can be ascertained from the fact that the Government of India in Finance Act, 2010 expanded the scope of many existing services and one of them being Port services . The expansion of definition of Port services , which has been brought into play by the Finance Act, 2010, would seeks to include all services provided entirely within airport/port premises would fall under these services i.e. Port services and there is no pre-condition of any authorisation from the port authority for taxing the services. It is also seen from the Circulars issued by the Government of India, more specifically, Circular dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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