By TIOL News Service

MUMBAI, AUGUST 01, 2014: THE appellants are engaged in the manufacture and sale of various gases. For the manufacture of their final product, the appellants are importing liquid helium. The liquid helium is to be stored at extremely low temperature i.e. minus (-) 269 O C. The liquid helium is procured, stored and transported through vacuum insulated tanks. The appellants are placing purchase orders with the foreign supplier for the import of helium and the helium is being supplied in the vacuum insulated tanks. The appellants also agreed to pay rent for the use of tank in transportation of the liquid helium. The helium is imported into India in the tanks. The same is transported to the factory and is used in the manufacture of their final product. The tank is thereafter re-exported. The ownership of the tanks remains with the exporter and the possession and effective control of the tank is with the appellants as per the terms of the purchase order. The appellants also undertake essential activities like unloading and keeping a stock of the helium stored in the tank.

Taking a view that the appellants had received 'Storage and Warehousing service' from the foreign service provider, the department proceeded to issue and confirm a demand of Service Tax on the appellant on the basis of reverse charge mechanism.

While allowing the Stay petitions, the CESTAT had held - 2013-TIOL-1858-CESTAT-MUM-

ST - applicant importing helium gas in tanks which is to be transported under a controlled temperature - customs duty paid on helium gas - helium gas is used in the manufacture of other gases - tank subsequently re-exported within 6 months - demand of ST confirmed on the ground that applicant is receiving storage and warehousing service from foreign service provider and hence liable to pay ST under reverse charge mechanism - there is no evidence to show that the supplier of gas has any responsibility in respect of the gas exported in tanks in the factory of the applicant - Pre-deposit waived and stay granted: CESTAT [para 6]

The appeal was heard recently.

The Bench adverted to the Board Circular F. No. B11/1/2002-TRU dated 1.8.2002 wherein while clarifying the scope of Storage and Warehousing services it is mentioned thus -

"3. Storage and warehousing service for all kinds of goods are provided by public warehouses, private warehouses, by agencies such as the Central Ware Housing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage godown and tankers operated by private individuals etc. The storage and warehousing service provider normally make arrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc. Service provided in ports has already been covered under the category of port service.

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5. It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. It is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area."

Noting that the exporter of helium cannot be held to be a storage and warehouse keeper as he has no control over the tanks, the CESTAT held that there is merit in the contention of the appellants that they had not received any service classifiable under 'storage and warehousing service'.

In fine, the appeals were allowed after setting aside the orders passed by the Commissioner of Central Excise (Appeals), Mumbai-II.

(See 2014-TIOL-1394-CESTAT-MUM)