Whether service tax leviable on storage of tanks in which helium gas is imported when excise duty already paid on gas including tank?

PJ/Case Law/2013-14/2051

Case:- INOX AIR PRODUCTS LTD VsCOMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:-2013-TIOL-1858-CESTAT-MUM

Brief facts:-The demand was confirmed on the ground that the applicants are receiving storage and warehousing service from the foreign service provider hence the applicants are liable to pay service tax on the reverse charge mechanism. In respect of appeal No. ST/87630/13, the demand is confirmed on the ground that the applicants are providing storage and warehousing service to their client hence the applicants are liable to pay service tax in this regard. The applicants were importing helium gas which is to be transported under a controlled temperature. The helium gas is imported in the containers and further appropriate customs duty is paid on the helium gas and thereafter the helium gas imported is transported to the factory of the applicants and the imported helium gas is used in the manufacture of other gases. The tank was subsequently re-exported within six months.

Appellant’s contention:-The contention of the applicants was that the applicants were importing helium gas which is to be transported under a controlled temperature. The helium gas is imported in the containers and further appropriate customs duty is paid on the helium gas and thereafter the helium gas imported is transported to the factory of the applicants and the imported helium gas is used in the manufacture of other gases. The tank was subsequently re-exported within six months. The contention was that the tank was for storage of helium gas and the applicants are not receiving any storage or warehousing service from the foreign service provider hence the demand is not sustainable.
In respect of the demand as provider of service of storage and warehousing, the contention is that the gases which are kept by the applicants are cleared on payment of appropriate duty including the storage charges of Rs.35,000/- per month. The gas is cleared in the tanks and the tanks were stored at the premises of the applicants and the applicants are receiving Rs.35,000/- per month as a rental of the tank. On the rental of the tank, the applicants are paying appropriate excise duty along with VAT. The applicants produced copies of invoices under which excise duty is paid on rental charges. The applicants relied upon the earlier stay order dated 4.6.2012 in appeal No. ST/214/12 - (2012-TIOL-1077-CESTAT-MUM), where the Tribunal allowed the waiver of dues which were confirmed on the same grounds. In view of the fact that the applicants are paying excise duty and VAT on the rental of the tanks, the demand is not sustainable.

Respondent’s contention:- The Revenue relied upon the findings of the lower authority and submitted that as the applicants are importing gas in the tanks and the gas is stored in the tanks in the factory of the applicants, therefore the applicants are liable to pay service tax on reverse charge mechanism. In respect of the rental charges received by the applicants in spite of the tanks in which the gas is being supplied to the customer, the contention is that the same is not liable for excise duty and the applicants are liable to pay service tax. The Revenue relied upon the terms and conditions of the agreement entered into between the applicants and their clients to submit that the responsibility of the applicants in respect of supply of gas upto the point of vaporizer in the factory of the applicants, therefore the applicants are liable to pay service tax.

Reasoning of judgment:- It was found that as the applicants are importing helium gas in the tanks and the tanks are subsequently re-exported. There is no evidence to show that the supplier of gas has any responsibility in respect of the gas exported in tanks in the factory of the applicants.
In respect of the rental charges received by the applicants from their clients in respect of the tanks in which the gas is supplied, it was found that the applicants are paying excise duty on the rental charges; therefore we find that the applicants have made out a strong case in their favour. Therefore, the pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeals. Stay petition allowed.

Decision:-Stay application allowed.

Comment:- The essence of this case is that when excise duty is paid inclusive of rental charges, service tax cannot be demanded under storage and warehousing services under reverse charge mechanism. It is a settled position that excise duty and service tax cannot be levied simultaneously for a particular activity.

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PJ/Case Law/2013-14/2051

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