The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand and observed that the handling of export cargo is not exempted service.
The appellant, M/s. St. John CFS Park Private Limited, is a Cargo Handling Agency engaged in providing services under the category of cargo handling service, management maintenance or repair service, storage and warehousing service and goods transport agency service.
It appeared that the appellant had availed Cenvat Credit of Service Tax paid on hire charges for the use of Fork Lift and Cranes for providing cargo handling services in the Inland Container Depot, which were hired from M/s. St. John Heavy Equipment Ltd., for loading, unloading and transporting both export and import cargos.
Entertaining thus a doubt that the handling of export cargo was not amenable to service tax being an exempted service, the Department issued show cause notices proposing that the appellant was not eligible to take Cenvat Credit of the input services since no separate accounts of input service were maintained in terms of Rule 6 of the CENVAT Credit Rules (CCR), 2004 and therefore, the appellant was liable to pay duty on the value of services rendered and received in respect of export of cargo, equal to 8% or 6%, along with applicable interest and penalty.
The Counsel for the appellant argued that the appellant is not engaged in providing any exempted service, as defined under Rule 2(e) of the Cenvat Credit Rules, 2004 and that the services, alleged to have been provided by the appellant, were in respect of export cargo and hence, the same is outside the ambit of service tax.
The Two-Member Bench of P Dinesha, Judicial Member and Vasa Seshagiri Rao, Technical Member held that “We hold that the Revenue is not justified in demanding the Service Tax by treating the handling of export cargo as an exempted service and consequently, we set aside the impugned order and allow the appeal.” “The services rendered by the appellant in this case, insofar as the same related to the handling of export cargo, is excluded from taxability and thus, the same cannot be brought as ‘exempted’ under Rule 2(e) of Cenvat Credit Rules . Once it is held as ‘excluded’, there is also no scope to consider the same as an ‘exempted’ service just for the purposes of Rule 6 of the Cenvat Credit Rules, 2004” the Bench concluded
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