1. This stay application has been filed by the applicants against the Order-in-Original No 12/MJ (12)/Commr/RGD/MAERSK/07-08 dated 5.9.2007 passed by the Commissioner of Central Excise & Customs, Raigad.
2. The Commissioner, vide the impugned order, held the services rendered by M/s Maersk India Pvt Ltd (hereinafter referred to as MIPL for short) for providing storage of export goods to M/s Maersk Logistic India Pvt Ltd (hereinafter referred to as MLOG for short) is taxable under Section 65(102) of the Finance Act, 1994; he confirmed demand of Service Tax made in the Show Cause Notice to the extent of Rs. 53,66,874/-; ordered MIPL to pay interest under Section 75 of Finance Act, 1994 and also imposed penalty of equal amount under Section 76 of Finance Act, 1994 for failure to pay service tax when it was due and also imposed penalty of equal amount under Section 78 of Finance Act, 1994 because the charge of suppression is proved from 1.2.2005.
4. The brief facts of the case are that MIPL are the holders of Service Tax Registration for the taxable services under the category of "Cargo Handling Services, "Storage & Warehousing Services" & "Goods Transport Agency". The main issue involved in the instant case is whether services provided by MIPL to MLOG and other clients by providing space for storage of export goods comes under the heading for "Cargo Handling Service" under Section 65(23) of the Finance Act, 1994 and for that reason or for any other reason gets excluded from entry for "Storage and Warehousing Services" under Section 65(102) of Finance Act, 1944.
5. We have examined the position. We find that the services provided by the Applicant at the CFS are in respect of both export as well as import cargo. While the Applicant is currently levying and paying Service Tax on services provided in respect of import cargo, they are not levying and paying Service Tax on services provided in respect of export cargo in accordance with the specific exclusion from the definition of "cargo handling services.
6. Section 65(23) of Chapter V of the Finance Act, 1994 (the Act) defines the term "cargo handling" as under: cargo handling service means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling services incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods.
7. Further, Section 65(105)(zr) of the Act defines the taxable service is respect of "cargo handling" as "any service provided or to be provided to any person, by a cargo handling agency in relation to cargo handling services " 17.2 It can be seen from the definition that handling of export cargo stands excluded from the definition of Cargo Handling Services. MIPL is canvassing the argument that since it is mentioned in this entry, it cannot be included in any other entry. This argument is patently wrong. If the service relating to handling of export cargo was included in the entry and exempted by a notification that service could not have been taxed under another head. Since this service is not at all included in the entry in Section 65(23), there is no bar in examining whether the services is included in other entries defined under Section 65. A mere mention for the purpose of exclusion cannot have the effect of inclusion in the entry and exempting it. Section 65(102) of the Finance Act, 1944 defines "Storage and Warehousing" as under: Storage and warehousing" includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage.
17.3. It is very clear from the contract entered into by MIPL with MLOG that they were providing services for storage and warehousing and charging MLOG for that. So the services are clearly taxable.
9. We find that similar issue has been dealt with by the Punjab and Haryana High Court in the case of Commissioner of Central Excise, Ludhiana v. Dr. Lal Path Lab (P) Ltd reported in 2007 (8) STR 337 (P&H) where the issue involved was whether the services rendered by the assessee-respondent in that case fall under the definition of the "Business Auxiliary Services" or "Technical Test and Analysis Services". We quote below the extracts of the relevant paras from the said judgment of the Punjab and Haryana High Court: 5. On further appeal filed by the assessee-respondent, the Tribunal came to the conclusion that the activities of the assessee-respondent were not covered by the provisions of Section 65(19)(ii) of the Act. The view of the Tribunal is discernible from paras 11 to 14 of its order, which reads as under: 11 There is no dispute that testing and analysis carried out in the specialized laboratories constitute "technical testing and analysis service" contemplated under the law. Those laboratories are also not subjected to, including in relation to the drawing of blood samples, service tax, treating those tests and analysis as relating to human beings. The services rendered by the appellants drawing, processing and forwarding of samples is integral to the testing of those samples. As already noted, one of the impugned orders has also noted that the drawing of test samples may form part of test and analysis.
All the same, they are being subjected to tax on the plea that those services are separate from the scope of testing and analysis service and are taxable as business auxiliary service. This approach is hard to understand. There could be no denying that in the absence of drawing of blood samples, there can be no testing. Further, even if the two services are seen as entirely separate and different services, drawing of sample and initial processing of the same are clearly, connected or incidental or ancillary to testing and analysis. We have already reproduced the definition of technical testing and analysis service in para 4 of this order. That definition is very broad in its scope. It covers "any service in relation to testing and analysis service." Thus, drawing of sample will come within the scope of the definition: The dispute as to whether drawing of sample forms part of testing and analysis service is not relevant in view of the sweeping nature of the definition. If the service is "in relation to" testing the service will get classified under technical testing and analysis. It is inconceivable that "relationship" of sample drawing and initial processing to testing can be denied. The relationship may be incidental or auxiliary. Whichever way it is, its connection to testing and analysis service is clear, integral and undenial. Thus, in the factual situation of the case, and the broad scope of the definition, definitely bring the services renders by the collection centres within the scope of technical resting and analysis service.
12. It is well settled that once there is a specific entry for an item in the tax code, the same cannot be taken out of that specific entry and taxed under any other entry. In the present case, revenue is seeking to discard the specific entry and to bring the appellant's services under a very general entry, only because under the specific entry no tax is payable. This approach is contrary to the scheme of the legislation. What is specifically kept out of a levy by the legislature cannot be subjected to tax by the revenue administration under another entry.
13. There is also no substance in the learned SDR's contention that since through definition, testing in relation to human beings or animal is excluded from the levy, those tests and analysis are liable to be taxed under some other general heading. Legislature has specifically recognized technical testing and analysis as a separate service for the purpose of levy. As to how the technical test and analysis are to be taxed under that heading is also for the legislature to decide. In the present case, through definition, the legislature has excluded "testing or analysis of human beings or animal" outside the levy. The definition clearly states the legislative intention not to impose any tax on such excluded technical testing and analysis. If the legislature had any intention to tax the testing or analysis in relation to human being or animal at a different rate than other technical test and analysis service, the legislature would have separately specified the levy. In the present case, clearly the intention of the legislature is not to impose any levy at all on testing or analysis of human beings or animals. Therefore, the contention of the learned SDR to the contrary is not a legally correct viewed.
7. Having heard the learned Counsel and closely perusing the order passed by the Tribunal, we are of the considered view that this appeal is liable to be dismissed because in pith and substance, the activity of the assessee-respondent is confined to a collection centre with facilities and trained employees for drawal of blood samples and to carry out essential processing (serum separation) of blood and forwarding the samples to the principal lab at Delhi through courier. The collection centres are also responsible for disposal of waste arising in the process. The case of the assessse-respondent appears to be covered by the exception postulated by Sub-section (106) of Section 65, which defines the expression 'technical testing and analysis'. The provision is reproduced hereunder for facility of reference - 'technical testing and analysis" means any service in relation to physical, chemical, biological or any other scientific testing or analysis of goods or material or any immovable property, but does not include any testing or analysis service provided in relation to human beings or animals; [Explanation: For the removal of doubts, it is hereby declared that for the purposes of this clause, "technical testing and analysis" includes testing and analysis undertaken for the purpose of clinical testing of drugs and formulations; but does not include testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, prevention of any disease or disorder in human beings or animals;] 8. A perusal of the afore-mentioned provision makes it clear that the expression 'technical testing and analysis' does not include any testing or analysis service provided in relation to human being or animals. The explanation goes to the extent of excluding from the afore-mentioned definition, a testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, prevention of any disease or disorder in human beings or animals. Such being the statutory provision, we do not entertain any doubt that merely because any incidental service is rendered by the assess-respondent like putting across or dropping of the name of the principal company, it would become part of the definition of 'Business Auxiliary Service' within the meaning of Section 65(19)(ii) of the Act. The view taken by the Tribunal is unassailable and deserves to be upheld.7. The ratio of the above decision seems to be equally applicable to the applicant's case. Prima facie, the storage and warehousing services provided by the applicants within the CFS should be regarded as "in relation to the cargo handling services".
8. Further, the Annexure II to Circular F. No. B11/1/2002-TRU, dated 1.8.2002, highlights the activities which are not taxable as they are part of the whole activity of providing 'cargo handling service'.
Relevant extracts of the circular are as under: 6. All goods meant for export are excluded from the scope of this levy. There may be cases where goods may be transhipped at a place other than the place of packing before reaching a place from where it is exported. For example goods are packed say at Agra for transportation to Bhopal where it is transhipped and ultimately reaches Mumbai, from where it is exported. A doubt has been raised as to whether service tax would be leviable on cargo handling service at Agra. It is clarified service provided in relation to any cargo which is meant for export, would not be taxable irrespective of the fact that it reaches the place of export after transhipment.
However, the relevant documents should show that the Goods are for export.
8. A point has been raised by Airports Authority of India (AAI) as to whether service tax will be leviable in respect of handling of transhipment of export cargo from one international carrier to another international carrier or from a domestic carrier to an international carrier. It is clarified that so long as the cargo is for export, no service tax on handling of such cargo is leviable.
For domestic cargo service tax will be applicable.
9. Another point raised by them is that they undertake transhipment of import cargo from international to domestic carrier which will be ultimately cleared at the final domestic destination. It is stated that the service rendered by them should be held as exempted and it merely relates to transportation of goods. This is not factually correct. Under the Notification No. Cargo/13519/Pt. I, dated the 4th June, 1993, issued under the International Airports Authority Act, 1973, the AAI can levy charges towards demurrage, handling charges, special charges for live animals, hazardous cargo, radio-active cargo and cargo requiring strong room facilities, storage and processing charges, terminal charges. They are not supposed to levy any transportation charges. Therefore whatever charges they levy in this regard would be only towards handling charges and accordingly, service tax would be leviable.
10. Thus, the above circular clarifies that the service provided in relation to any cargo which is meant for export would not be taxable.
It also clarifies that the activities such as storage, processing charges, demurrage and transportation and transhipment of export cargo are part and parcel of the main activity of "cargo handling service".
Prima facie, we find that storage services provided by the applicants are one of the elements of providing "cargo handling services" through the CFS.11. Following the ratio of the Punjab & Haryana High Court's decision in the case of CCE, Ludhiana v. Dr. Lal Path Lab (P) Ltd cited supra and in the light of the above prima facie findings as referred to above, we are of the view that the applicants have made out a strong prima facie case for the complete waiver of the pre deposit of the Service Tax and penalties imposed. Hence we waive the pre deposit of the Service Tax demanded and penalties imposed, and stay recovery thereof pending the appeal.