UNITED SHIPPERS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THERE are 4 appeals arising out of Order -in -Original No. 100 -103/NG/COMMR/TH -II/2012, dated 29 -11 -2012 passed by the Commissioner of Central Excise Thane -II disposing of 4 show cause notices, dated 23 -10 -2008, 10 -9 -2009, 15 -10 -2010 & 21 -10 -2011 respectively covering the period from 1 -7 -2003 to 31 -3 -2011. There is a fifth appeal directed against Order -in -Original No. 04/NG/COMMR/TH -II/2013, dated 19 -2 -2013 passed by the Commissioner of Central Excise, Thane -II disposing of show cause notice, dated 27 -9 -2012 covering the period 1 -4 -2011 to 31 -3 -2012. By the impugned orders, the Commissioner has held that the services provided by the appellant merit classification under the category of 'Cargo Handling Services'. Accordingly, the Commissioner has confirmed demands of Service Tax of Rs. 56,36,38,084/ - and Rs. 2,16,84,812/ - together with interest thereon and also imposed penalties under Sections 75, 76, 77 & 78 of the Finance Act, 1994. The brief facts relevant to the case are as follows. The appellant, M/s. United Shippers Ltd. holds Service Tax Registration under the category of 'Cargo Handling Services' & 'Port Services (Minor)' w.e.f. 23 -9 -2003 and 3 -9 -2003 respectively. During the relevant period, the appellant had entered into contracts with various customers and agreed to provide various services in relation to stevedoring including on -board stevedoring, barging, loading, unloading, transportation of cargo by barges from Mother Vessels to Jetty, handling, weighment, deployment of security services, storage and all other services necessary for successful discharge of cargo. Acting on intelligence that the appellant was evading Service Tax on the services rendered by it to its various customers which appeared to be taxable under the category of 'Cargo Handling Services', the officers of DGCEI, Mumbai Zonal Unit, caused necessary investigation. The investigation revealed that the appellant was providing a composite activity of cargo handling to its customers, but splitting up the gross consideration received by raising separate invoices - one for 'stevedoring, loading, unloading, internal haulage, deployment of security and storage charges' under the description - 'Port Services (Minor Ports)' and another for 'Shipping Charges' & 'Reimbursement of Expenses incurred at the Port for wharfage, transshipment and Jetty usage charges'. The officers also found that the appellant was discharging Service Tax only on 'Port Services (Minor Ports)' and not on the Shipping Charges. It, therefore, appeared that shipping charges/shipping freight realised by the appellant from its customers were liable to be included in the taxable value under Section 67 of the Finance Act, 1994 inasmuch as the gross amount realised by it was in relation to 'Cargo Handling Service' provided. After completion of necessary investigation a show cause notice, dated 23 -10 -2008 was issued to the appellant by the ADG, DGCEI, Mumbai covering the period from 1 -7 -2003 to 31 -3 -2008. Seeking to classify the services provided by the appellant under the category of 'Cargo Handling Services' under Section 65(23) r/w Section 65(105)(zr) of the Finance Act, 1994, besides demanding Service Tax along with interest from the appellant and proposing imposition of penalties under Sections 75, 76, 77 & 78 of the Finance Act, 1994. Later on, 4 more periodical show cause notices, dated 10 -9 -2009, 15 -10 -2010, 21 -10 -2011 & 27 -9 -2012 were issued by the Commissioner of Service Tax, Mumbai covering the period from 1 -4 -2008 to 31 -3 -2012 on the same ground. The demands were confirmed and penalties imposed. Hence these appeals by the appellant.

(2.) THE ld. counsel for the appellant made the following submissions: - -

(3.) A point has been raised as to what would be the value of Service Tax in a case where transport and cargo handling service is provided in a composite manner. The measure of tax is the gross amount charged by the cargo handling agency from the customer. Therefore, if lump sum amount is charged for both transportation and cargo handling, the tax will be payable on the entire amount. On the other hand, if the bill indicates the amount charged for cargo handling and transportation separately on actuals basis (verifiable by documentary evidence), then the tax would be leviable only on the cargo handling charges.