T.K. Jayaraman, Member (T)

1. This is an appeal filed against the Order-in-Revision No. 05/2006 dated 20-12-2006 passed by the Commissioner of Central Excise, Mangalore.

2. The brief facts of the case are as follows:

The appellants provided "Cargo Handling Services" to various exporters in relation to export of iron ore fine from New Mangalore Port. They paid Service Tax of Rs. 4,79,397/- even though the export cargo is excluded from the levy of Service Tax under the Cargo Handling Service. Therefore, they filed a refund claim on the ground that they paid the tax erroneously and Service Tax is not leviable on export cargo. But, the Assistant Commissioner passed an order dated 02-5-2005 holding that the said services would be classifiable under "Port Service" and, therefore, Service Tax has been correctly paid. The appellants approached the Commissioner (Appeals) who passed an order dated 28-10-2005 holding that the "Port Service" is one which is rendered by a Port authority or any authorized agent of the Port and in the present case, there is no evidence that the appellants are a Port Authority or authorised by the Port Authority for rendering services on behalf of the Port. Therefore, he allowed the appeal by way of remand to the Adjudicating Authority directing him to decide after verification whether the appellants had rendered service under the "Cargo Handling Service" or "Port Service" and, sanction refund accordingly. Consequently, the Assistant Commissioner of Central Excise passed an Order-in-Original dated 12-1-2006 holding that the services rendered by the appellant would come within the purview of "Cargo Handling Service" and since the exports cargo is excluded from the purview of the above services, he sanctioned the refund of Rs. 4,79,397/- paid by the appellants for the period from April 2004 to September 2004, but ordered the same to be credited to the Consumer Welfare Fund. The Commissioner of Central Excise, Mangalore, issued a Show Cause Notice under Section 84 of the Finance Act, 1994 proposing to revise the OIO dated 12-1-2006 and to classify the handling of export cargo rendered in the Port premises under the classification of "Port Service" and to re-credit the refund amount to the Government Account. The Commissioner passed the impugned Order-in-Original dated 20-12-2006 holding that the handling of Iron Ore fines for export by the assessee would come within the Port premises and it would be appropriately classifiable under the "Port Service" and, therefore, the appellant would not be entitled for the refund. He ordered that the said amount should be re-credited to the Revenue Account of the Service Tax. The appellants strongly challenge the impugned order.

3. Shri M.S. Nagaraja, the learned advocate, appeared for the appellants and Shri Anil Kumar, the learned JDR, for the Revenue.

4. The learned Advocate submitted that the appellants are holding Stevedoring Licence issued by the Mangalore Port Trust. Stevedoring is actually for loading and unloading of cargo. In the present case, the appellants are loading the export cargo. Moreover, Shri Nagaraja referred to Section 42 of the Major Port Trust Act, 1963. This Section provides that the Board, (meaning Port Trust) is required to render a large number of services in the Port in relation to vessel as well as goods and the Board may render the services on its own or with the previous sanction of the Central Government, may authorize any other person to render such services. In the present case, Shri Nagaraja submitted that the services have been rendered directly by the appellants to their clients and it cannot be said that the appellants had an authorization to provide service on behalf of the Port. He has also invited our attention to the CBEC Circular dated 1-8-2002 and said that the said Circular may not be applicable to the services rendered by the appellants directly to the clients. The permission to render services within the Port premises will not be tantamount to rendering services authorized by the Board. He tried to make a subtle distinction between stevedoring licence and an authorized section to render services on behalf of the port"He relied on the decision of the Tribunal in the case of Homa Engineering Works v. CCE, Mumbai 2007 (7) S.T.R. 546 (Tribunal) : 2007-TIOL-769-CESTAT-Mumbai wherein the Tribunal was examining a similar controversy when the department contended to classify the maintenance and repair services rendered to a vessel by an independent person in the Port premises under "Port Service". The Tribunal, after examining the various contentions, held that the taxable services under the net of "Port Service" means any service rendered by a Port or any person authorized by such Port. As such, the services which can be taxed under the said category have to be either services rendered by the Port itself or any person authorized by such Port. In that case, the Revenue tried to tax the repair services rendered by a ship repairing company as "Port Service". The Tribunal did not accept Revenues contention and in fact held that the Boards Circular issued on this behalf is not in accordance with law. The learned advocate questioned the jurisdiction of the Commissioner to review the order passed by the Assistant Collector de novo. Ac-, cording to the learned Advocate, the Commissioner (Appeals) already decided the issue substantially and the right course for the Commissioner would have been to file an appeal against the order of the Commissioner (Appeals) when he has already decided that the services rendered by the appellant would not come within the purview of "Port Services". In view of this, he requested the bench to allow the appeal.

5. The learned departmental representative reiterated the contentions in the Commissioners order.

6. We have gone through the records of the case carefully. The point at issue is whether the services rendered by the appellants amount to "Port Services" and whether they are liable to pay Service Tax in terms of the Finance Act, 1994. We find that the appellants obtained the stevedoring license from the Man-galore Port Trust for carrying out the stevedoring operations. The stevedoring operations actually mean loading and unloading of cargo within the port premises. The Commissioner has interpreted that the appellant is carrying out the services within the port and he has been authorized by the port to render such services in view of the licence given to him. Therefore, he would rightly fall within the ambit of the "Port Services". However, when we examined the issue in terms of Section 42 of the Major Port Trust Act, we find that in terms of that Section, the major port is supposed to carry out a number of activities and there is provision in terms of the said section for the port to authorize any other person to render such services after taking prior approval of the Central Government. In the present case, the appellants strongly contend that the services rendered by them are not on behalf of the ports but on their own behalf. In other words, the appellants render directly the services and the licence is only a permission to undertake such services within the port premises. Therefore, it cannot be interpreted that the appellants are rendering any service on behalf of the port. We also find that the issue has been gone in depth in the I cited decision of the Mumbai Tribunal wherein the Tribunal held that the port is supposed to give only facility for ship repairing and it is not expected of a port to directly render the services of ship repairing. Interpreting Section 42 and the provisions of the Service Tax in the Finance Act, the Mumbai Tribunal even held that the Boards 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 appellants 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.

(Pronounced in open Court on 6-8-2007)