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TMI Blog2017 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... iliary Service - appellant submitted that the activities of removal of shale, stone, extraneous materials and breaking clean Coal to (-) 200 mm size are integral part of the mining process - Held that: - the Tribunal in the case of Aryan Energy (P) Ltd. v. Commr. of Cus. C.Ex., Hyderabad-I [2008 (5) TMI 248 - CESTAT Bangalore] held that the activities relating to Coal mining, washing of coal (benefication) are treated as part of mining activity and mining service came into effect from 01.06.2007 and set aside the demand under the category of Business Auxiliary Service - the processing of the coal in a mine is in a wide range. The activities of removal of the shale, stone, extraneous materials and breaking up of the coal are after the excavation of coal from the mines. Apparently, the processes undertaken by the appellants are for marketability of the coal and part of the mining activities. Hence, the demand of Service Tax under the category of Business Auxiliary Service cannot be sustained - demand withheld. Site Formation Services - appellant submitted that the excavation and removal of over-burden is an integral part of the mining activity and it is in relation to mining of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal allowed in part. - Appeal No. ST/63/09 - Order No. FO/A/77607/2017 - Dated:- 30-10-2017 - Shri P.K.Choudhary, Member ( Judicial ) And Shri B.Ravichandran, Member ( Technical ) S/Shri Kartik Kurmy, S.B.Sharma, A.Sharma, Advocates for the Appellant Shri S.C. Jana, Spl. Counsel for the Revenue ORDER Per Shri P. K. Choudhary Briefly stated the facts of the case are that the appellant obtained Service Tax registration No. AACFC 2065PST001 w.e.f. October, 2006. The appellant entered into various contracts/agreements with companies for different jobs, such as with Damodar Thermal Power Station (DTPS) for excavation of Ash, transportation and disposal in the abandoned mines of M/s Eastern Coalfields Ltd. (ECL) etc.. They have also entered into contract with Bharat Coking Coal Ltd. (B.C.C.L.) for various works including soil excavation, removal of over burden, transportation, drilling and blasting of coal etc.. It has also entered in contract with National Building Construction Co. Ltd. (NBCC) as a sub-contractor for construction of staff dormitory consisting of 54 units. 2. A show cause notice dated 13.02.2008 was issued proposing demand of Service Tax alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that they have obtained three types of contracts for (i) transportation of Coal inside mines with incidental loading of Coal with composite rates for both the activities within mines, (ii) there are certain other contracts for transportation of Coal inside mines with incidental breaking, loading with separate rates for transportation and loading within the mines, (iii) the third kind of contracts are for Hiring of Pay Loaders for mechanical transfer of Coal into Railway Wagon and loading of Coal into trucks/tippers within the mines. It is submitted that the transportation with incidental loading would be classifiable under Goods Transport Agency service and Service Tax is payable by the client under reverse charge mechanism. It is also submitted that the activities undertaken by the appellant are not Cargo Handling Agency Services. He referred to the Boards Circular No.B-11/1/2002-TRU dated 01.08.2002. The ld. Counsel also cited several decisions. 5.2 The ld. Commissioner observed that the appellant was awarded contract by CCL, MCL, WCL, NCL, ECL, DVC to undertake loading/unloading of coal into Railway wagon and tipper trucks mechanically and loading and transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight of a ship; the goods merchandise, or whatever is conveyed in a ship or other merchant vessel. concise Oxford Dictionary Cargo-the goods carried commercially on a ship or aircraft or truck. Webstar s Dictionary Cargo-Goods and merchandise taken on abroad, vessel, aircraft etc. Webstars New Collegiate Dictionary Cargo- goods or merchandise conveyed in ship, airplane or vehicle Cargo- Entire load for ship which carries the load-interpreted by English Court in the case of National Dock Labour Board v. John Blarad Co. Ltd. [(1971) 2 All ER 779, 789 (HL)] 14. In common parlance cargo means load, which is to be carried by ship, aeroplane, rail or truck. The handling of transportation of goods, by itself unless it is an organised activity, which is connected with carrying cargo (load) by ship, aeroplane, rail or truck is involved would not fall within the definition of cargo handling service. The definition specifically excludes handling of export cargo or passenger baggage or mere transportation of goods. 5.5 We find that in the case of Singh Brothers vs. Comm. of Cus. Cen.Ex., Indore, reported in 2009 (14) S.T.R. 552 (Tri.-De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the boiler bunkers through conveyor system. It is evident that handling of the coal is done through wagon tippling system or conveyor system, they are mechanical devices and no motor vehicle is involved in the said handling. The clarification made by the CBEC also supports the petitioners contention. It clearly appears that the Service tax has been levied under the Cargo Handling, on such services which undertakes the activities of packing, unpacking, loading, unloading of goods to be transported by any means of transportation namely truck, rail, ship or aircraft. In the instant case the service provided by the petitioner Firm under the contract is distinct i.e. transporting coal from wagons to Thermal Power Station by conveyor belt and not by any means of transportation. Thus we are of the view that the service rendered by the petitioner under the subject contract does not fall under the ambit of Cargo Handling Services and as such it is not liable to pay the service tax. 6. In the light of above, we hold the facts of the present case is substantially the same as dealt with in the case of Gajanand Agarwal Others (supra) and that the decision of the Commissioner treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be payable on the entire amount. Para 4 of the Annexure-II to the said letter is cited below. A point has been raised as to what would be the value of service tax in a case where transport and cargo handling service is provided in a composite manner. The measure of tax is the gross amount charged by the cargo handling agency from the customer. Therefore, if lump sum amount is charged for both transportation and cargo handling, the tax will be payable on the entire amount. On the other hand, if the bill indicates the amount charged for cargo handling and transportation separately on actual basis (verifiable by documentary evidence), then the tax would be leviable only on the cargo handling charges. From the above discussion it emerges that the activities of loading of coal into Railway Wagons and loading and transportation of coal undertaken by the said noticee come under the category of Cargo Handling service as defined under Section 65(23) of the said Act. We do not find any fault in the above finding. 6. Business Auxiliary Service (BAS):- 6.1 The ld.Counsel for the appellant submitted that the activities of removal of shale, stone, extraneous materials and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period is prior to 1-6-2007 and therefore our conclusion is that for the relevant period the activity carried out by the appellant would not be liable to service tax as mining service. 16. Once it is established that the activity of the appellant is mining,, it cannot be taxed under the Business Auxiliary Service for the period prior to 1-6-2007. Even when we examine the definition of business auxiliary service, it is seen that production which does not amount to manufacture comes under business auxiliary service. The beneficiation of coal does not amount to production of coal because beneficiation is a process, which enhances the quality of the coal. However, in the definition of business auxiliary service, an amendment was carried out to include process also w.e.f. 16-6-2005. The appellant has made an alternative submission that if the activity carried out by them is not considered as mining activity the demand can be sustained only from 16-6-2005 to 31-8-2005 only. There are sufficient grounds to hold that the activities carried out by the appellant amounts to mining service. When such a view is taken, the appellant would not at all be liable to service tax for a period p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B.C.C.L.. The relevant portion of the work order is reproduced below:- Excavation in benches (IN SITU) by mechanical cans at any depth in kinds of soils, rocks including Mixed soil, mixed hard soil, i.e. clay, soils mixed with Pebbles/Laterite/Stone boulders, soft or hard rock etc. including drilling at any depth, removal of slushy earth, Mud Slurry as required, transporting and unloading the excavated materials mechanically and disposed off either a) dumping outside the working zone in proper manner on the dumping yard or b) directly back filling of the excavated area in proper layer including spreading, dozing etc. all complete as per instruction of project officer/Engineer-in-charge. The job involves making access trench/haul roads dozing as required for excavation operation and for transportation of excavated materials etc. all Complete. (Blasting will be done by department on cost recovery of explosives, detonator and Fuses from the contractor for removal of OB) Av.Carraige lead Minimum 0-1 K.M. / Lift 15 Mtr Quantity of OB- 13,12,000 cu mt. Winning/extraction of coal mechanically in benches from available coal seam at any depth including drilling using suitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) commercial or industrial buildings and premises thereof; or (ii) factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof, but does not include such services in relation to agriculture, horticulture, animal husbandry or dairying;] From the above definition, it is clear that the cleaning activity would cover cleaning of commercial or industrial building or premises thereof or factory, plant or machinery, tank or Reservoir of such commercial or industrial buildings or premises. 8.4 It is seen from the letter dated 03.02.2004 of DVC that the appellant was awarded tender for excavation of Ash from different field of Ash Ponds of DTPS, DVC, Waria, Nuisance free transportation and disposal of Ash in abandoned mines of ECL. It appears that the purpose of the tender is for disposal of Ash in the abandoned mines of ECL. The appellant is engaged for transportation and disposal of Ash in the abandoned mines. The letter does not show that the appellant was engaged for cleaning of the premises. Therefore, the demand of Service Tax under the category of cleaning service is not justified. 9. Construction of Residential ..... X X X X Extracts X X X X X X X X Extracts X X X X
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