T.K. Jayaraman, Member (T)

1. This appeal has been filed against Order-in-Original No. 13/2006/ST dated 27.10.2006 passed by the Commissioner of Central Excise and Customs, Cochin Commissionerate.

2. The appellant are holders of Service Tax Registration under the category of Customs House Agent (CHA) services. The appellants have also been licensed by the Cochin Port Trust to undertake stevedoring operations at Cochin Port. Revenue conducted investigation which revealed that the appellant had not been paying any Service Tax on the stevedoring charges collected by them. According to Revenue, the stevedoring charges would come within the category of Port Services, therefore, it was alleged that the appellant had failed to take Service Tax Registration under the category of Port Services in respect of the stevedoring services rendered by them. Further, it was revealed that the appellants are providing Customs House Agent service to their clients and are holding Service Tax registration under the category of Customs House Agent services. In the case of Customs House Agent service, the assessee mostly undertakes to transport goods meant for export to the customs station or from customs station to the importers premises. It was noticed by the Revenue that the assessee had not kept separate accounts for the transportation business, therefore, the actual expenses incurred on this behalf could not be ascertained. Since these are reimbursable expenses, they would be entitled for exclusion from the value of taxable services in terms of Trade Notice No. 5/1997 ST dated 12.6.1997 of Mumbai Commissionerate. As seen, the value of amount to be excluded was not ascertainable, it was alleged that the appellant had to pay Service Tax on the transportation charges also. Therefore, Revenue proceeded against the appellant and the Adjudicating Authority passed the impugned order. The total demand comes to Rs. 1,32,32,214/-. This comprises of the demand on account of the tax on the stevedoring charges which was considered as Port Service and in respect of the CHA service also the amount has been demanded to the tune of Rs. 28,83,515/- along with Education Cess of Rs. 20,354/-. Thus, the total demand of Rs. 1,32,32,214/- has been issued. Interest under Section 75 has been demanded. Penalties under Section 76, 77 and 78 have also been imposed. The appellants are highly aggrieved over the impugned order.

3. S/Shri B.V. Kumar, and B. Venugopal, learned advocates appeared on behalf of the appellant and Shri K. Sambi Reddi, learned JDR on behalf of the Revenue.

4. We heard both sides. The learned advocate brought to our notice that the Original Authority has considered stevedoring services as Port Services and levied Service Tax for the charges collected by them as stevedoring charges. The stevedoring activity is loading and unloading of cargo. He explained that this activity is rendered by the appellant on his own behalf. He is actually directly dealing with the party. The appellant is only licensed by the port to undertake the stevedoring activity and these activities had not been done on behalf of the port neither they had been authorized by the port to do any port services. He said this issue is no longer res integra and it has been held in the following decisions that the stevedoring charges would not be considered as Port Services for the purpose of Service Tax.

(i) Velji P. & Sons (Agencies) P. Ltd. v. CCE, Bhavnagar 2007 (8) STR 236 (Tri.-Ahmedabad)

(ii) Homa Engineering Works v. CCE, Mumbai 2006 (1) STR 19 (Tri.-Mum.)

(iii) New Mangalore Port Trust v. CST, Mangalore 2006 (4) STR 448 (Tri.-Bang.)

(iv) Western (I) Shipyard Ltd. v. CCE, Goa 2006 (3) STR 639 (Tri.-Mum.)

(v) BBR (India) Ltd. v. CCE, Bangalore III 2006 (4) STR 269 (Tri.-Bang.)

(vi) Konkan Marine Agencies v. CCE, Mangalore (Tri.-Bangalore) Final Order No. 884/2007 dated 6.8.2007

In view of the clear decision, he stated that the ratio of the above decisions should be applied and the demand on account of the stevedoring services should be set aside.

5. Coming to the demand on account of CHA services in view of the fact that the appellant had not kept separate accounts for the transportation, it was submitted that the finding of the Commissioner is on account of incorrect appreciation of the fact. During the course of hearing before this bench, the learned advocate showed us various bills raised on their customers and in each of this bill, there is a clear indication of the transportation charges. Therefore, it cannot be said that the appellant had not kept separate accounts for transportation charges. Now, this transportation charges are clearly reimbursable from their customers and they have to be necessarily excluded from the amount received from their customers. In these circumstances, the demand of Service Tax by including the transportation charges collected by the appellant is not in order. Therefore, this is also liable to be set aside.

6. Summing up the demand on account of stevedoring services and by inclusion of transportation charges under the category of CHA services is not sustainable. Therefore, we set aside the demands. Since the demands are not sustainable, there is no justification for imposition of any of the penalty. We set aside the impugned order and allow the appeal with consequential relief.

(Operative portion of this Order was pronounced in open court on conclusion of hearing)