Storage in Container Freight Station is Incidental to Cargo Handling Activity and not Liable to charge Service Tax: CESTAT [Read Order]

The Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that storage in a container freight station is incidental to cargo handling activity and not liable to charge service tax.

The appellants, Seabird Marine Services Pvt Ltd, Mundra International Container Terminal Pvt. Ltd., Allcargo Logistic Ltd. and Honeycomb Logistics Pvt. Ltd. are container freight stations. The appellants are providing services on the basis of a tariff card. There are standard packages which involved the complete service of container freight station (including storage for a specified limited time) at a particular rate. All the appellants are paying service tax on such services in case of import of goods.

The Revenue relied upon Circular No. B11/1/2002 contented that the service provided by the Appellant falls under "Storage and Warehousing Services" and demand of interest and imposed penalties. Against which the CFS’s filed appeal before ITAT.

The counsel for the appellant submitted that that finding of the revenue is contrary to the facts. Both in case of import or export, when

cargo was stored in warehouse beyond the specified period as mentioned in the Tariff Card, the appellant collected storage and warehousing service charges separately from its client and paid service tax under the category of "Storage and Warehousing Services”. Similarly, if any transportation is done by vendors for the purpose of moment of containers of cargo from port to CFS or otherwise then such transportation would be liable to Service Tax on reverse charge basis under GTA service.

The revenue contended that the appellant paid service tax under the category of "Storage and Warehousing Services" in the case of storage of imported cargo but in the case of storage of export cargo, they did not pay service tax by classifying the same under the category of "Cargo Handling Service” even though the nature of services rendered for Import and export were identical.

The Tribunal observed that the storage in the container freight station is only incidental to the cargo handling activity. The main purpose of the Container freight Stations is to handle cargo for the purpose of import or exports. The main purpose of the container Freight Stations is not Storage and Warehousing. The Tribunal further observed that Circular No.104/7/2008-ST issued by CBEC clarified that transportation is not an essential character of “Cargo Handling Services” but only incidental to “Cargo Handling Services”.

The Coram of Mr. Ramesh Nair, Member (Judicial), and Mr. Raju, Member (Technical), while allowing the appeal held that “the impugned orders that only the “Cargo Handling Services” provided in respect of transportation of goods would be classifiable as “Cargo Handling Services” is misplaced and liable to be rejected”.

Mr. Hardik Modh, appeared for the Appellant, and Mr. T.G. Rathod, appeared for the respondents.

To Read the full text of the Order CLICK HERE

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