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TMI Blog2014 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... s not taxable as cargo handling service under Section 65 (105) (Zr). - service tax demand for the period prior to 16/6/05 is not sustainable at all As regards the service tax demand for the period from 16/6/05 to 31/5/07 - the entire contract has to be treated as a mining contract and not a contract for site formation, clearance, excavation and earth moving. Therefore, for this period also, the appellant’s activity cannot be subjected to service tax under Section 65 (105) (ZZZa). We find that same view has been taken by the Tribunal in an identical issue involved in the case of M. Ramakrishna Reddy vs. CCE & CUS, Tirupathi [2008 (10) TMI 115 - CESTAT, BANGALORE] Moreover, when w.e.f. 01/6/07 the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/07, the same activity cannot be classified as site formation and clearance, excavation and earth moving or as cargo handling service. The service tax demand for the period prior to 01/6/07 and also the penalty under Section 78 to that extent set aside. - Demand for the normal period of limitation and penalty u/s 76 confirmed - Decided partly in favor of assessee. - Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongwith interest thereon under Section 75 of Finance Act, 1994 and also for imposition of penalty on them under Section 76, 77 and 78 ibid. The show cause notice was adjudicated by the Commissioner, Central Excise, Jaipur II vide order-in-original No. 2/2009/ST/JP-II/Commissioner dated 03/3/09 by which the Commissioner - (a) confirmed the service tax demand of Rs. 1,63,14,265/- under proviso to Section 73 (1) of Finance Act, 1994 alongwith interest thereon under Section 75 ibid ; (b) imposed penalty of Rs. 1,63,14,265/- on the appellant under Section 78 of the Finance Act, 1994 ; and (c) imposed penalty of Rs. 100/- per day upto 18/4/06 and @ Rs. 200/- per day or 2% of the tax amount not paid, whichever is higher, since 19/4/06 under Section 76 of the Finance Act, 1994 till the date of payment of the service tax, subject to the maximum of Rs. 1,63,14,265/-. The Commissioner in this order held that the appellant s activity was Cargo Handling Service during the period till 15/6/05 and accordingly taxable under Section 65 (105) (Zr), was site formation and clearance, excavation and earth moving service taxable under Section 65 (105) (ZZZa) during the period from 16/6/05 to 31/5/07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th moving service under Section 65 (105) (ZZZa), that confirming service tax demand on the amount of remuneration received by the appellant for mining service for the period from 2003 to 15/06/05 by classifying the same as the Cargo Handling Service under Section 65 (105) (Zr) is absolutely without any basis, as the loading of the mined lignite into the trucks is a peripheral activity and in any case handling of mined lignite etc. within the mining area is not Cargo Handling Service, as held by the Tribunal in the case of Sainik Mining Allied Services Ltd. vs. CCE, CUS ST, BBSR reported in 2008 (9) S.T.R. 531 (Tri. - Kolkata), wherein the Tribunal held that cargo, in commercial parlance, means as the one which is carried as freight in the ships, planes, rail or truck and movement of coal within the mining area is not handling of cargo meant for transportation, that in any case, just because of loading of mined lignite at the pits into the trucks, which is a peripheral activity, the entire activity of the appellant cannot be classified as mining service, that as regards the classification of the appellants activity during period from 16/6/05 to 31/5/07 as site formation and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (24) S.T.R. 395 (Ori.) and also the judgment of the Tribunal in the case of Gajanand Agarwal vs. CCE, BBSR reported in 2009 (13) S.T.R. 138 (Tri. -Kolkata), that during the period from 16/6/05 to 31/5/07 since the new clause (ZZZa) had been inserted in Section 65 (105) which covered the activity of site formation and clearance, excavation and earth moving and demolition service and since the appellant s activity was more specifically covered by this clause, the Commissioner has correctly demanded service tax for this period under Section 65 (105) (ZZZa), that when w.e.f. 01/6/07 mining service became taxable by inserting clause (ZZZy) in Section 65 (105) and since this heading covered the appellants activity more specifically, the demand for the period from 01/6/07 has been confirmed under Section 65 (105) (ZZZy), that throughout during the period of dispute, the appellant have not taken service tax registration and not informed Department about their activity even though w.e.f. 01/6/07 mining service had become taxable and at least from 01/6/07 there could not be any doubt about the taxability of the appellants activity, that in view of this, the extended limitation period u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of lignite and the payment by RSMML to them is also on the basis of the quantity of the lignite of the desired quality produced and the loaded into the trucks and site clearance, and removal of top soil and over burden are incidental activities for which they are not even paid separately and hence, on the basis of the activities which are incidental to the mining activity, their contract cannot be treated as a contract for site formation, excavation etc. 8. As regards the Department s plea that during period prior to 15/6/05, the appellants activity was taxable as cargo handling service under Section 65 (105) (Zr), we find that except for mention of loading of the mined lignite of the desired quantity into the trucks in Clause 4.2.1 (c) of the agreement, there is absolutely no mention of any handling or transportation of coal by the appellant within the mining area. As held by the Tribunal in the case of Sainik Mining Allied Services Ltd. vs. CCE, CUS ST, BBSR (supra), cargo in commercial parlance means the goods which are to be carried as freight in ships, planes, rail or trucks and cargo handling service is handling of such goods meant for transportation and it is on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice demand for this period has been confirmed by classifying the appellant s activity under Section 65 (105) (ZZZa) as site formation and clearance, excavation, earth moving and demolition service . Here also from the appellant s contract it is clear the contract is for mining of lignite of the required quality and in course of mining, while the appellant are also required to clear the site and remove the top soil and over burden, there is no separate payment for this activity. The activity of site formation and clearance, excavation of top soil and over burden, therefore, has to be treated as an activity ancillary to mining and since the overall contract is for mining and as such it is an indivisible contract, the entire contract has to be treated as a mining contract and not a contract for site formation, clearance, excavation and earth moving. Therefore, for this period also, the appellant s activity cannot be subjected to service tax under Section 65 (105) (ZZZa). We find that same view has been taken by the Tribunal in an identical issue involved in the case of M. Ramakrishna Reddy vs. CCE CUS, Tirupathi reported in 2009 (13) S.T.R. 661 (Tri. - Bang.). 10. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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