K.K. Agarwal, Member (T)

1. The appellants are registered as a ship repair unit and have entered into agreement with the Board of Trustees of the port of Mormugao under which the port has licensed the appellants to use certain portion of land and water within the port area for the purpose of providing newly built floating dry dock and for ship repairing within the said premises on payment of licence fee of Rs. 96 Lakhs per year. The ship repair activity of the appellant in the port area were considered to fall under the category of port services and since the appellants have not registered themselves with the service tax authorities nor paid any service tax a demand was raised and confirmed against them for an amount of Rs. 7,11,18,000/- along with interest and a penalty of Rs. 99,000/- was imposed for the period 16-7-2001 to 31-3-2004.

2. The learned advocate Shri Hidaytulla for the appellants invited our attention to the decision of Tribunal in the case of Homa Engineering Works v. C.C.E. - 2006 (1) S.T.R. 19 (Tribunal) : (2005) 2 STT 157 wherein a prima facie view was taken that the services of repair of vessel were not port services and were not liable to service tax. It was accordingly submitted that the appellants have a prima facie case in their favour and therefore the pre-deposit of the amount should be waived and since the issue is of a recurring nature and revenue involved is high the matter may be listed for early hearing.

3. Shri Pardeshi, learned J.D.R. submits that subsequent to the decision of CESTAT in Homa Engineering Works Board had issued a clarification stating that shipping service will also be covered by port service and therefore the waiver of pre-deposit of duty should not be granted. Shri Pardeshi however could not produce the circular.

4. We have considered the submissions. We find that prima facie the appellants have made out a case in their favour in view of the Tribunal decision in the case of Homa Engineering Works and therefore, we grant full waiver of the pre-deposit of duty and penalty till disposal of the appeal. Since the amount involved is high and issue is of recurring nature the matter is fixed for early hearing on 28-8-2006.

(Pronounced in Court)