M/S Laxmi Enterprises vs Commissioner Of Central Excise, ...

(Arising out of Orders-in-Appeal No. BC/519/BEL/2012-13 dated 6.12.2012 and No. BC/89/BEL/2013-14 dated 30.5.2013 passed by the Commissioner of Central Excise (Appeals), Mumbai-III).

For approval and signature:

Honble Shri Anil Choudhary, Member (Judicial)

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2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

M/s Laxmi Enterprises Appellant

Vs.

Commissioner of Central Excise, Belapur Respondent

Appearance: Shri Keval Shah, C.A. for Appellant

Shri S.V. Nair, AC (AR) for Respondent

CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing: 06.04.2015

Date of Decision: 06.04.2015

ORDER NO.

Per: Shri Anil Choudhary

The appellants have filed the present appeals against order of the Commissioner (Appeals) by which the CENVAT Credit availed by the appellant with respect to CHA services have been disallowed in part for the amount charged in the CHA bills by way of Cargo Handling Services.

2. Heard the parties.

3. Both sides agree that the issue in the appeal is squarely covered by the earlier order of this Tribunal in Appeal No. ST/88718/13 in the appellants own case being Order No. A/66/15/SMB dated 30.12.2014. The said order is quoted herein below: -

The appellant is in appeal against the impugned Order-in-Appeal No. BC/88/BEL/2013-14 dated 16.5.2013 passed by the Commissioner of Central Excise (Appeals), Mumbai-III, in which he upheld the rejection of refund claim of Rs.85,677/- against them.

2. The facts are that the appellant claimed refund of Rs.3,79,947/- for the period October, 11 to December, 11 on taxable services received by them and used for export of goods in terms of Notification No. 17/2009. Out of the total amount, the adjudicating authority sanctioned an amount pertaining to the services of Technical Testing, Banking, and Cleaning services but rejected the amount of Rs.85,677/- on the Customs Agent Service.

2.1 The rejection of refund was on account of the fact that the invoices of input services showed the description as Export Cargo Handling charges. The adjudicating authority held that only CHA services are specified and eligible for refund under Notification No. 17/2009-ST dated 7.7.2009 but the Export Cargo Handling service is not specified in the said notification. The Commissioner (Appeals), while deciding the appeal of the party, had perused the sample invoice no. 2655/NR/AS dated 18.11.2011 and agreed with the adjudicating authority that the category of Cargo Handling Service mentioned in the invoice is not included in the Notification No. 17/2009. It was also observed by the Commissioner (Appeals) that the conditions in Notification No. 17/2009, that shipping bill no. and date should be mentioned on the invoice have to be met. He relied on the Hon'ble Supreme Court decision in the case of Rukmini Pakkwel Printers  2004 (165) ELT 481, in which it was held that in an exemption notification strict construction of a notification has to be done in terms of their own words. Accordingly, he rejected the refund claim.

3. Heard both sides.

4. The learned C.A. appearing on behalf of the appellant drew my attention to the finding in the Order-in-Original to the effect that the Range Superintendent verified the refund claim with all relevant documents, such as shipping bill, bill of lading, export invoices etc. Therefore, the Commissioner (Appeals) observation that the conditions of Notification No. 17/2009 were not fulfilled is without basis. He also drew my attention to the invoice no. 2655 of the Service Provider in which the shipping bill no., invoice no. etc. are all mentioned. He also showed that the Export Cargo Handling Charges mentioned in the invoice on which Service Tax has been paid relate to expenses incurred by them such as Labour expenses, Phyto charge, EDI expenses etc. for which no separate receipts have been received by them and therefore, they have included these expenses in the total expenses claimed by the CHA from them as Export Cargo Handling charges. He also drew my attention to the taxable service of Cargo Handling under Section 65(105)(h) and stated that the Cargo Handling Service defined under Section 65(25) excludes handling of export cargo. The learned C.A. relied on the Tribunals decision in the case of Chowgule & Co. (Salt) Pvt. Ltd. Vs. Commissioner of Central Excise, Rajkot  2013 (31) STR 334 (Tri-Ahmd) in support of his contention that what needs to be examined is whether Service Tax has been paid under the category of service notified in Notification No. 17/2009 and if it is felt that the Service Tax is not payable, action was required to be taken at the end of service provider.

5. The learned AR reiterated the findings of the Commissioner (Appeals).

6. I have carefully considered the submissions of both sides. There are two issues to be decided. The first issue is whether the appellant are eligible for refund under Notification No. 17/2009 on the services shown as Cargo Handling Service in the invoice issued by the CHA. It is seen that Notification No. 17/2009 allows exemption to the CHA service used in export of cargo. While exporting of goods, the appellant availed the services of CHA. The CHA, while raising the invoice against the appellant for the service rendered by him, has described the service rendered by him in two parts in the invoice namely, Export Cargo Handling Charge and Agency Charges. Further, Service Tax was paid on both types of charges. Revenue has denied the credit to the appellant in respect of Export Cargo Handling charges, but allowed the credit on agency charges, which is the CHAs fee. I note that in the description Export Cargo Handling Charges in the invoice, the description of charges is shown as EDI expenses, shipping bill charges, labor expenses, P&Q charges. It is apparent that these charges are shown separately to make it clear to the appellant regarding the exact nature of charges which have been billed by the CHA. There is no doubt that all expenses incurred by the CHA relates to CHA service, provided in relation to export of the goods, specified under Section 65(105)(h) of the Finance Act, 1994. The mere description of the service as Export Cargo Handling does not affect the nature of the service provided as CHA service by the CHA. In any case, as stated by the learned C.A., the Cargo Handling Services excludes Handling of Export Cargo. Government has allowed refund of input service tax to make export competitive and not to impose tax on exports. In any case, legally also. the benefit of refund cannot be denied to the services described in the invoice as Export Cargo Handling when these charges are clearly incurred by the CHA, who is providing CHA service to the appellant. I find support from the decision of the Tribunal in the case of Chowgule & Co. (supra). On this first issue, I hold that the appellant is eligible for refund.

6.1 The second issue raised is whether the appellant has satisfied the condition of Notification No. 17/2009, I find that the sample invoices considered by the Commissioner (Appeals) i.e. Invoice No. 2655 dated 18.11.2011 clearly indicates the shipping bill no. and date, invoice no. and date, bill of lading no. and date; i.e. all the details of the goods exported in relation to which CHA has charged the appellant for fees in the invoice no. 2655. The Commissioner (Appeals)s finding on this issue are not borne by the facts on record. Therefore, the Commissioners findings are rejected and the appellant is held eligible for refund.

6.2 It would however be appropriate that the actual verification of payment of Service Tax on input services in undertaken by the adjudicating authority before sanctioning refund.

6.3 Appeal is allowed on merits. However, matter is remanded to adjudicating authority only for limited purpose of verification of payment of Service Tax on the input services.

4. Accordingly, in the light of aforesaid order of this Tribunal dated 30.12.2014 (supra), these appeals are also allowed by way of remand for the limited purpose of verification of payment of Service Tax on the input services.

(Dictated and pronounced in Court)

(Anil Choudhary) Member (Judicial)

Sinha

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