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TMI Blog2024 (7) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... ince mining services were introduced vide clause zzy under Section 105 of Section 65 of the Finance Act with effect from 01/06/2007, it is a pradox for the department to change its stance for classification of the service without any change in actual operations undertaken. The nature of activity carried out by the appellant was therefore non-taxable prior to the introduction of service tax on mining services. Therefore the appellant was not required to obtain Service Tax registration and discharge any Service Tax liability thereon - It need to be understood that for open cast mining operations to be carried out removal of overlaying soil and rocks is essential. Therefore, as such no mining activity can be executed either without removal of overburden (open cast minerals) or making a shaft (for underground mines). The contracts were awarded to the appellant not only for site preparation alone but also included a host of other activities from site formation, excavation of overburden, extraction of ore, transportation of overburden to a specific location, drilling, blasting, construction maintenance of haul roads, dust suppression etc. The present contract are therefore a composite co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posal of the matter by this Tribunal at the time of Stay vide Order No. S/159/Kol/2010 dated 19/04/2010. The present appeal is now being heard in pursuance of the order of the Hon ble High Court of Kolkata dated 31/01/2014 in CEXA/17/2023, IA No. GA/1/2023. 2. The case in brief is that the appellant provides open cast mining service comprising of removal of overburden wherever required and subsequent extraction/mining of coal or uranium for their clients Bharat Coking Coal Limited (BCCL) and Uranium Corporation of India Ltd. (UCIL) and transporting the same from the pit head to storage place/railway siding. The Department issued Show Cause Notice dt. 7.11.2007 to the appellants demanding Service Tax as Site Formation and Clearance, Excavation and Earth Moving and Demolition services for the period 2005-2007, while the demand for the said period, under the head BAS was dropped by the Learned adjudicating authority. 3. The appellant submits that during the period 16/06/2005 to 28/02/2007 they were awarded three contracts (two by BCCL and one by UCIL) whereby nature of job execution was in the nature of mining service comprising of Excavation of all kinds of soils, rock, etc. and tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the on A/C Bill of the successful tenderer use of sufficient quantity of water art requisite pressure ect Mechanical Loading of coal in to tippers and transportation to Kankanee siding including Loading coal into wagons (Lead face to siding-4.5Km.) qty-531899 531899 MT Rs. 52.00/- MT (Rupees fifty two only per Metric Ton) Rs. 2,76,58,748 TOTAL Rs.16,50,68,648 TABLE-II UCIL SI No. Description of item Quantity Unit Rate Rs. Ps. Amount Rs. Ps. 01 Excavation per bank cubic meter for Overburden/waste. This will be inclusive of drilling, blasting, excavation, including Box-Cutting, loading transportation (Including cost of POL), dumping leveling, construction and maintenance of haul roads, dust suppression, mine water dewatering Illumination etc. 1949400 Meter cube 117.00 22,80,79,800.00 Rate in words: (Rupees One Hundred Seventeen only) 02. Excavation per bank cubic meter for Ore. This will be inclusive of drilling, blasting, excavation including Box-Cutting, loading, transportation (including cost of POL), dumping leveling, construction and maintenance of haul roads, dust suppression, mine water dewatering, Illumination etc. 515700 Metre cube 117.00 6,03,36,900.00 Rate in words: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng ancilliary activities and payment whereof were prescribed therein. The discharge of the said activities, removal of slushy earth and over burden, excavation, blasting, loading, unloading and transportation of the overburden to the designated area are an integral part of the contractual agreement as well as any mining activity. The removal of over burden in a mining operation is a continuous process and is an imperative for the extraction/excavation of the mineral resources or the ore. The deposits (coal/uranium) are found under layers of earth which have to be removed before they can be excavated. It is so also clear, from the scope of the work awarded in favour of the appellant by the two public sector organizations that the nature of activity and work carrying out pertaining to extraction of coal in case of BCCL and that of uranium ore in case of UCIL as are indicated in the contracts entered with the two parties. The same is irrefutably covered under the category of mining services. We are therefore of the view that the activity undertaken cannot be levied to Service Tax prior to introduction of mining services with effect from June 2007. 7. We also note that the learned adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tamination, like laterite/soil/waste and other inferior materials. The quality of ore so produced by the appellant is required to be certified by company s representative before the same is transported to the stockyard for crushing. From these clauses of the contract appellant is required to handle both the waste material (overburden) and the ore excavated during blasting. Clause 2(f) of this contract also talks of transporting Hard Sponge Ore boulders to the crusher. Clause 4 of this contract also convey that 75% of the materials to be removed will constitute soft rock consisting of Flaky/Friable ore, Soft Ore, etc. It is also observed from the Scientific literature relied upon by the appellant that laterised Hard ore, Flaky/Friable mixed ore and soft ore excavated and transported by the appellant are treated as categories of ore and not simply as overburden removal. Clause 8 of Annexure-3 regarding Additional Terms Conditions to the contract convey that all material/ore arising, occurring, excavated, lying in stock etc. shall always be the property of the company (Tata Steel). In view of the above facts on record it cannot be said that appellant is mainly undertaking site prepara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) (ii) . (iii) (iv) All open cast working (v) . C;aise (kk) of Section 2 of the Mines Act, 1952 has defined open cast working in the following words:- open cast working means a quarry, that is to say, an excavation where any operation for the purpose of searchings for or obtaining minerals has been or is being carried on 12. From the above statutory provisions it is manifestly clear that an open cast mine cannot be conceived without removal of the overlaying soil and rocks so that one can reach to the layers of minerals below for recovery thereof. In both the cases of BCCL as well as UCIL, the appellant were entrusted with the job of mining, although the Work Orders had fixed different rates for the removal of overburden and other allied activities and extraction/winning of minerals. That simply is a mechanism for fixing of rates for different activities, but by no means the activity of removal of overburden can be taken out of context so as to charge service tax under a different head of site formation and clearance, excavation and earthmoving and demolition as defined under clause 97(a) of Section 65 of the Finance Act, 1994 and to declare the remaining portion of the activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract. 14. To the effect of our findings above, are also the views expressed by the Tribunal in a slew of cases. Thus the case of M. Ramakrishna Reddy V. Commissioner of CCE Cus, Tirupathi (2009)13 STR 661 (Tri.), where it has been held as under:- 10.1 From the above, it is very clear that the salient feature of the services rendered by the appellant is mining. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. Hence, we allow the appeal with consequential relief. [Emphasis supplied] 14.1 To the said ratio are also the decisions of the Tribunal in the case of: (i) Associated Soapstone Distributing Co. Pvt. Ltd. V. Commissioner-2014 (34) S.T.R. 865 (Tribunal). (ii) CCE, Hyderabad V. Vijay Leasing company 2011 (22) S.T.R. 553 (Tribunal) also held similar views in the matter. wherein the activities undertaken of both excavation and removal of overburden/waste and mining ore were clearly identified as one composite act and cannot be split into two separate parts for purpose of levy of service tax. The primary activity is thus necessarily to be considered as winning of minerals which undoubtedly is a mining activity. 15. Reliance by the learned AR to the case laws of M/s Rashleela Enterprises Pvt. Ltd. Vs. Commr. of Central Excise Commissionerate, Alwar-(2023 (7) TMI 201-CESTAT New Delhi) that of M/s Jain Carrying Corporation V. CCE, Jaipur-2014 (12) TMI-506, CESTAT, New Delhi is of no avail to the department, because of the difference in the factual matrix of those cases. We would also add that the facts of the case cited by the ld. AR for Revenue, in the case of Hanumant Constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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