By TIOL News Service

MUMBAI, NOV 13, 2015: THIS is a Revenue appeal against O-in-A wherein the Commissioner (Appeals) set aside the O-in-O confirming the demand of ST by treating the proceeds of auction of warehoused imported goods upon being abandoned by the importer as being service charges towards storage or warehouse.

Before the CESTAT, the AR while reiterating the grounds of appeal submitted that as per Section 150 of the Customs Act, 1962, when the goods are sold by public auction, proceed of any such sale, among other payments, charges in respect of goods sold due to the person having custody of the goods, the said proceed is also paid towards storage and warehouse charges. Since, in the present case the respondent retained the proceeds of the sale in auction and adjusted the same against storage and warehouse charges the same is liable to service tax as the amount is nothing but receipt towards services of storage and warehouse of the goods so abandoned.

The respondent submitted that in the present case whatsoever sale proceed is received by them is towards auction of the goods and the said proceeds were not received from any service recipient; since the service recipient does not exist, the transaction could not be held liable to service tax.

It is further emphasized that the Commissioner (Appeals) had rightly dropped the demand relying on the Board Instruction F.No. B-11/1/2002-TRU dated 1/8/2002 [Annexure II, Paragraph 12] wherein it was clarified that no cargo handling service is said to have been rendered in case of abandoned cargo, therefore, service tax is not leviable.

The Bench observed -

"6. We find that service tax was proposed to be demanded on the sale proceed of the auction of the abandoned imported goods. In the whole transaction no service recipient is existing; therefore there is no question of providing any service to any person. Merely for the reason that Section 150 provides for distribution of the amount of proceed of auction that will not empowered the government to recover service tax on the auction proceeds. The Ld. Commissioner with proper application of mind given detailed finding not only on the facts but also on the law point of Section 48, 150 of Customs Act, 1962 and also discussed in detail the service tax provision and referred Master Circular dated 23/8/2007 and Board Circular dated 1/8/2002. Findings of the Ld. Commissioners (Appeals) is reproduced below:- xxx…"

Holding that there is absolutely no infirmity in the order of the Commissioner (Appeals), the same was sustained and the appeal of the Revenue was dismissed.

(See 2015-TIOL-2414-CESTAT-MUM)