CCE, Tirunelveli Respondent Appearance ShriRaghavanRamabadran, Advocate for the Appellant Shri M. RammohanRao, DC (AR) for the Respondent CORAM Honble Shri R. Periasami, Technical Member Honble Shri P. K. Choudhary, Judicial Member Date of Hearing : 04.06.2015 Date of Pronouncement: 04.12.2015 Final Order No.4166341664/2015_ Per R. Periasami The appellants filed appeals against the Commissioners orders dated 25.1.2007 and 29.5.2008. As the issue involved in both the appeals is common, both the appeals are taken up together for disposal. 2. The brief facts of the case are that the appellant is statutory body constituted under Port Trust Act which administers and operates Tuticorin Port which is one of the major ports in Tamil Nadu and registered with the service tax department for rendering port services and discharging service tax and filing returns. During audit verification it was noticed that the appellants have entered into agreement with M/s. PSA SICAL for development of their Berth No. VII as container terminal on BOT basis and as a consideration they have received monthly royalty charges. Showcause notices were issued to them demanding service tax on the royalty charges for the period June 2003 to February 2006 and March 2006 to January 2007. The adjudicating authority in his order dt. 25.1.2007 confirmed the service tax of Rs.3,22,87,322/ under port services and imposed equal amount of penalty under sections 76 and 78 of Finance Act, 1994 and in his order dated 29.5.2008 confirmed the service tax of Rs.2,55,27,328/ and imposed penalty of Rs.15,05,811/ under section 76 & 78 of Finance Act, 1994. Hence the present appeals. 3. Heard both sides. 4. Learned counsel appearing for the appellant submits that the appellants are regularly discharging service tax on all the activities carried out under port services. The period involved in this case is from June 2003 and January 2007. As per policy of the Government they have decided to lease a portion of the port area i.e. Berth No.VII to a private operator M/s. PSA SICAL Terminals Ltd. to construct and operate the container terminal on BOT basis. He submits that as per the agreement only a vacant land was leased out to PSA SICAL. In consideration of the leasing out of the portion of the port area, they received royalty. He further submits that the consideration received as royalty charges is not towards discharging any port services to the PSA SICAL. He relied on the BOT Agreement dated 15.7.1998 between the appellant and PSA SICAL. He further submits that as per the showcause notice the demand was raised only on the royalty charges as per clause 7.3.5.2 of the agreement which relates to monthly royalty payment in consideration of the above authorization whereas the Department has demanded service tax under port services on the amount received as a royalty from the licensee. During the relevant period the only services which are liable for service tax under port services are in relation to vessels and goods as to section 65(82) of the Finance Act, 1994. He submits that the definition of the port service is very clear. Any service rendered by a port or other port or any person authorized by such port in any manner, in relation to a vessel or goods. In their case, the royalty amount is not in relation to any service rendered in relation to vessel or goods but purely on the leasing of Berth No. VII. 5. He further submits that PSA SICAL is also registered under service tax and discharging service tax on all the activities carried out by them under port services. He further submits that only with effect from 1.6.2007 service tax was introduced on renting of immovable property. Therefore, prior to this period there was no service tax leviable on renting of immovable property. He also submits that from 1.8.2007 they are regularly paying service tax under renting of immovable property on the same royalty charges. He relied on para 13.3(a) of the orderinoriginal wherein the adjudicating authority has clearly recorded the submissions of the appellants that they are paying service tax on all port services. 6. They discharged service tax on other services which are listed in clause 6.2.1 of the agreement relating to water supply to ships, repair and maintenance work, security to Berth No. VII and fire service. They have not rendered any service which does not attract s