Whether Terminal handling charges fall under the port service prior to issue of Notification 17/2009?

PJ/Case Laws/2012-13/1487

Case:- M/s ADF FOODS LTD Vs COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-III

Citation:- 2013-TIOL-421-CESTAT-AHM

Brief Facts:- The Brief facts of the case are thatcertain discrepancies were noticed on scrutiny of refund of service tax amounting to Rs.70,006/- granted to the appellant, the Commissioner in exercise of powers vested in him u/s.87 of the Finance Act, 1994 issued show-cause notice requiring to show cause as to why the order sanctioning refund should not be revised. The show-cause notice was issued on the following grounds:

(i) The bills did not contain details as required under Notification No.17/08-ST;

(ii) Service provider did not fall under the category of port service;

(iii) No evidence was produced to show that service providers did not fall under the category of port or authorized by port even though refund claim was of service tax paid under the category of port service.

(iv) Shipping bill charges are covered under business auxiliary Service which is not a specified service. Appellant did not produce original copies of documents. Proceedings have culminated in the impugned order wherein the commissioner has found only Rs.7 ,338 /- was admissible as refund on the invoices of on CHA.

Reasoning of Judgment:- The Tribunal had taken into the consideration the matter that "Terminal Handling Charges which was included only after issue of Notification No.17/2009-ST dated 07/07/2009 and therefore prior to that date refund was not admissible”. In this regard Tribunal held that show-cause notice had clearly observed that service tax was paid under the category of port services by the service providers. Even though the charge was named as "Terminal Handling Charges", tax liability was in fact discharged under port service which is one of the specified services under Notification No.41/2007-ST dated 06/10/2007. Further from the observation of the Commissioner itself, it is clear that service tax was paid under the category of port services. In such a situation, if service tax is not refunded on the ground that it was for Terminal Handling charges which is not a specified service, is not correct. In any case, Terminal Handling was not a separate service during the relevant time nor at this time. It falls under the category of port services only. Moreover, it is quite possible that Terminal Handling Charges are collected by CHA/Service Provider of the appellant and paid to persons who actually did the work. In view of the fact that service tax was paid under the category of port services, the action taken by the Commissioner to deny service tax is not in accordance with law. The impugned order is required to be set aside and is set-aside. Since the original authority has to scrutinize the refund claim, the matter is remanded to the original adjudicating authority.

Decision: - Appeal allowed by way of remand.

Comment:- The essence of this case is that refund of Terminal Handling Charges is admissible irrespective of the category under which it is classified. Moreover, these are covered under port services only which are eligible for refund.

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PJ/Case Laws/2012-13/1487

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