1. The appeal is directed against the finding that the appellant is rendering ‘cargo handling services’ to M/s Lafarge India (P.) Ltd. in regard to cement manufactured by M/s Lafarge India at its cement plant at Gopal Nagar and that service tax is required to be paid on the amounts received for rendering the said cargo handling services. Present appeal describes the service rendered as under :

"The appellants provide labour for managing various points in the mechanized process of packing and loading of cement bags. Lafarge India has installed machines for packing of cement in HDPE bags and for automatically loading of these bags into trucks and wagons through a conveyer system. The labourers provided by the appellants simply stand at different places in the mechanized packing process. One person feeds cement bags onto the machine which captures these bags and pours cement into bags and the bags get sealed automatically. After this, the bags fall onto the conveyer system which takes these bags to the exist point that goes right into the truck or wagon. At the exit point, the labourers simply give a helping push to the bag whenever necessary, so that it falls in place and the bags are properly stacked. We are enclosing copies of the photographs to show various stage of this process. These would shows that Lafarge India conducts it own packing and loading process in which labourers supplied by the appellants play a very secondary role."

2. During the hearing of the case, appellant has shown, on the computer, the actual packing and loading activity as well as the role played by the labourers supplied by the appellant. What is being emphasized is that the packing and loading is in continuation of the manufacturing of cement by the cement plant and that all these activities are done mechanically by machinery and conveyer owned by the cement manufacturer, and that packing and loading processes are fully automated and the manpower supplied by the appellant is only supplementing the mechanized packing and loading. During the hearing of the case, learned Counsel, particularly stressed that in this situation of mechanized handling of cement, the appellant does not own the machinery of packing and loading, nor have they hired out the machines from their own so as to be undertaking the activity of "cargo handling".

3. The contention of the appellant is that it is only a manpower supplier and not a cargo handler. It is being pointed out that this position is clear from the contracts in question inasmuch as it is stated in contracts that packing and loading is through wagon and truck loading machines and that the appellant is "providing support for packing and loading" and that "the rate PMT as stipulated is based on payment of workers as per cement wage board rate effect from 1-4-2003" [Order No. PL/ACP/PU/PP/WO/265/03/11210, dated 21-8-2003].

4. According to the learned Counsel, the appellant’s activity does not take in the essential ingredients of cargo handling like loading, unloading, packing or unpacking. Instead, its labourers, are only rendering supervision/assistance in the mechanized operations and in these facts and circumstances, the appellant does not fulfil the criterion of being a cargo handling service renderer.

5. Learned Counsel has also pointed out that according to the clarificatory instructions F. No. B11/1/2002-TRU, dated 1-8-2002, the appellant’s service cannot come within the scheme of cargo handling service. He has referred in particular to paragraphs 3 and 15 of those instructions which are reproduced below :

"3. The services which are liable to tax under this category are the services provided by cargo hand-ling agencies who undertake the activity of packing, unpacking, loading and unloading of goods meant to be transported by any means of transportation namely truck, rail, ship or aircraft. Well known examples of cargo handling service are services provided in relation to cargo handling by the Container Corporation