Kotak Ginning & Pressing Industries Ltd vs Commissioner Of Service Tax, Mumbai

(Arising out of Order-in-Appeal No. SB(62-63)/JTC/2010 dated 3.6.2010 passed by Commissioner of Service Tax, Mumbai)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

====================================================== Kotak Ginning & Pressing Industries Ltd. Appellant Vs. Commissioner of Service Tax, Mumbai Respondent

Appearance:

Ms Aparna H, Advocate, for Appellant Shri A.B. Kulgod, Additional Commissioner (AR), for Respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing : 28/09/2015 Date of Decision : 28/09/2015

ORDER NO

Per: M.V. Ravindran

These two appeals are directed against Order-in-Appeal No. SB(62-63)/JTC/2010 dated 3.6.2010.

2. Since these appeals are raising a common issue and in respect of the very same assessee, we dispose of the appeal by a common order.

3. Heard both sides and perused the records.

4. Appellant herein had filed four refund claims for the period October, 2007 to September, 2008 and one refund claim for the quarter October, 2008 to December, 2008 on the amount paid as service tax on various services which was utilized for export of the goods. The adjudicating authority issued show cause notices and following due process of law rejected the refund claim of the service tax paid on Terminal Handling Charges, Loading and Unloading Services, Cargo Handling Services, Clearing and Forwarding Services and also held that the appellant had claimed the benefit of drawback, hence they are not eligible for the refund as claimed by them. On an appeal filed, the first appellate authority, after considering the submissions made by the appellant, allowed the appeals and held refund is eligible to the appellant of the service tax paid on Cargo Handling Services, Clearing and Forwarding Services and rejected the claim of the service tax paid on Terminal Handling Services; accepted the contentions of the appellant that they had not claimed drawback of the service tax paid on various services. Revenue has not preferred any appeal against the said order.

5. The entire issue boils down as to whether the service tax paid by the service providers on Terminal Handling Charges are eligible for refund under notification no. 41/2007-ST or otherwise. The adjudicating authority as well as the first appellate authority has held that the service provider has paid service tax under Cargo Handling Services which is not covered for refund as per the provisions of notification no. 41/2007-ST. We find that both the lower authorities were incorrect in coming to such a conclusion, as the said notification in table at calumn number 2, permitted refund of service tax paid on any service used for exports of the goods under section 65 (105) (zzn). It is the case of the Revenue that the service under section 65 (105) (zzn) is for the port services and the service provider has not discharged the service tax under this category. We find that the issue is no more res-integra as Honble High Court of Gujarat in the case of Commissioner of Central Excise AIA Engineering Pvt. Ltd.-2014 (36) S.T.R. 1236 (Guj.) has, on a question of law on the same issue, held as under, which we respectfully reproduce.

The Department is in appeal in all four cases against different orders of Custom Excise and Service Tax Tribunal (Tribunal for short). The issue is similar in all cases. We may notice the facts emerging in Tax Appeal No. 2391 of 2010. In such Appeal, Department has challenged the order of Tribunal, dated 23-7-2010 [2010 (20) S.T.R. 512 (Tri.-Ahmd.)]; by which Tribunal was pleased to held that Repo charges and Handling charges payable by the respondents are covered by Exemption Notification. More particularly, one, dated 17-9-2007, being Notification No. 40/2007-S.T. In context of this decision of Tribunal, the Department has raised the following question for our consideration :

In the facts and circumstances of the case, whether CESTAT was right in considering the charges for Terminal Handling charges and Repo Charges covered under Sections 65(105)(zn), despite clear legal provisions given in the Finance Act, 1994 and relevant Notification issued thereunder?

2.?Having heard learned counsel for the parties, we notice that the said Exemption Notification No. 17/2009-S.T., provided total exemption from payment of Service Tax paid on services commonly known as terminal handling charges. Such exemption was available for service classified under sub-clause (zn) of Clause 105 of Section 65 of the Finance Act, 1994. Section 65(105) defines various taxable services. Clause (zn) thereto defines taxable service to mean any service provided to any person, by a port or any person authorized by the port in relation to port services, in any manner

3.?We may notice that in the impugned order, the Tribunal had relied on its previous decision in case of M/s. Macro Polymers Pvt. Ltd. v. CCE, Ahmedabad, dated 4-6-2010 - 2010 (19) S.T.R. 679 (Tri.). In such a decision, the Tribunal considered various aspects of exemption under the said Notification vis-a-vis services covered by virtue of Section 65(105)(zn) of the Finance Act, 1994.

4.?Before proceeding, we may also record that subsequently, the Government issued another Notification No. 17/2009-S.T., dated 7-7-2009, in which for all services classified under Clause (105) of Section 65, exemption was granted from payment of Service Tax paid on services commonly known as terminal handling charges. Of course, as rightly pointed out by the learned counsel for the respondent, such Service Tax had to be paid by the service provider and refund thereto had to be claimed by the exporters services recipients. However, we are not concerned with the modalities of this Exemption. Suffice to note, juxta position to the earlier Notification, dated 6-10-2007, in the subsequent Notification, dated 7-7-2009, the exemption was available to all services classified under sub-clause (zn) of Clause 105 of Section 65.

5.?It is thus, not in dispute by virtue of subsequent Notification, dated 7-7-2009, there is no conflict between the department and the assessee. The period of conflict therefore, gets narrowed down to two dates between the two Notifications.

6.?Having perused the material on record, as also the decision of the Tribunal in case of M/s. Macro Polymers Pvt. Ltd. (Supra), we see no reason to take a different view. The department seems to be contending that the services provided by the respondents would not fall under sub-clause (zn) of Clause 105 of Section 65. Even if, Department has some arguable point there, however, in the present appeals, it is not disputed that in majority of the cases, Service Tax were collected under such entry. When the assessee claimed exemption, as provided in Notification, dated 6-10-2007, the Department has issued Show Cause Notice why the refund claim should not be rejected, since Service Tax does not fall under Section 65(105)(zn) at all. Having previously collected the Service Tax under such heading, we are doubtful whether such reverse stand could have been taken. In totality of the facts and circumstances of the matter, no question of law arises, all tax appeals therefore, dismissed."

6. In view of the forgoing, we hold that the impugned order to the extent it is contested before us is liable to be set aside and we do so and appeal is allowed to that extent, with consequential relief, if any.

(Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

akp 1 3 APPEAL No.ST/436, 623/10-Mum