Whether service tax paid on transportation of empty container and detention charges shall be eligible for refund?

PJ/Case law/2012-13-1555

Case:- M/s Vippy Industries Ltd. Vs. C.C.E., Indore

Citation:- 2013(30) S.T.R. 238 (Tri. Del.)

Issue:- Whether service tax paid on transportation of empty container and detention charges shall be eligible for refund?

Brief Facts:- The appellant is engaged in the manufacture and export of soya milk. They filed two refund claims for refund of Cenvat credit in terms of Notification No. 41/2007 for the period January, 2009 to March, 2009.The said refund claim was adjudicated by the Assistant Commissioner who observed that the appellant has fulfilled all the conditions of Notification No. 41/2007, dated 6-10-2007. He accordingly, allowed the majority of refund claim, but rejected the part claim on the ground that the Service Tax stand paid by the appellant in respect of movement of empty containers from the stockyard to the appellant’s factory cannot be considered as the input services. Further part claim stands rejected on the ground that same stands paid as Service Tax on detention charges which cannot be considered to be input services. The said order of Assistant Commissioner stands challenged before Commissioner (Appeals), who also rejected the appeal by observing that the Service Tax paid on transportation of the containers from the stock yard to appellant’s factory is not admissible to the appellants. Similarly, in respect of detention charges also, he observed that the refund is not admissible as the same are not specified service under Notification No. 41/2007 dated 6-10-2007. Thereafter appellant filed an appeal against the order of Commissioner (Appeal) before Tribunal.

Respondent’s Contention:- The respondent submit that the Service Tax paid on transportation of the empty containers from the stock yard to appellants factory is not admissible to the appellants. The respondent also submit that in respect of detention charges also, the refund is not admissible as the same are not specified service under Notification No. 41/2007 dated 6-10-2007.

Reasoning of Judgment:- The Tribunal heard both the parties and finds that as regards the first issue i.e. Transportation of empty container, Tribunal finds that the same is no longer res integra and stand settled in the following cases :

CCE, Madurai v. Tata Coffee Ltd. [2011 (21) S.T.R. 546 (Tri.-Chennai)];
Balkrishna Industries Ltd. v. CCE Aurangabad [2011 (24) S.T.R 433 (Tri.-Mum.)];

Garware Polyester Ltd. v. CCE Aurangabad [2011-IST-400-CESTAT-MUM] = 2012 (27) S.T.R. 288 (Tri-Mum)]

The Tribunal also finds that in all the above mentioned cases that the refund of Service Tax paid on the transportation of empty containers from yard to the factory for stuffing of the export goods is admissible inasmuch as the said activity is in relation to the transportation of the export goods. As such, by following the decision of the above judgement, we hold that the appellant is entitled to the refund of Service Tax paid on the said activity of movement of empty containers from the yard to factory premises.

The Tribunal also finds as regard to the second issue of detention charges, the appellants contention is that such detention charges is a part of transportation charges which was used for transportation of export goods. The department has accepted the payment of Service Tax on such detention charges and as such, they cannot take the different view for the refund of the same.

The Tribunal finds that such detention charges are paid on containers waiting for their turn to be cleared. As such, till the appellant is given the green signal for clearance of the containers, the appellant is not able to export the goods. As such, broadly speaking, such detention charges are in relation to transportation of the export goods. Tribunal in the case of CCE, Madurai v. Tata Coffee Ltd.referred supra has observed that the expression 'in relation to transportation of export goods' is wide enough. Till the transportation is factually completed the charges paid for detention of the same prior to the completion have to be held as 'in relation to transportation of the export goods'. As such, we are of the view that appellants claim for refund of the same is entitled to be allowed.

In view of the above, we set aside the impugned order and allow the appeal with consequential relief to the appellant.

Decision:-Appeal is allowed with consequential relief.

Comment:- The crux of this case is that service tax paid on transportation of empty container and detention charges shall be eligible for refund. In the present case the Tribunal also observed that the expression 'in relation to transportation of export goods' is wide enough. Till the transportation is factually completed, the charges paid for detention of the same prior to the completion have to be held as 'in relation to transportation of the export goods’ and the same is eligible for refund.

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PJ/Case law/2012-13-1555

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