Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2024 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 72 - AT - Service TaxLevy of service tax - Mining Services - appellant is responsible to operate and maintain the HPMACs, owned by ONGC, to produce and supply compressed air to ONGC - HELD THAT:- It is well settled law on this issue that the person in whose hand the excisable goods are produced is liable to discharge the Central Excise duty liability. In the present case, ‘Compressed Air’ is specified as excisable goods under Tariff Heading No. 28530030 and the process of compression has resulted in the production of Compressed Air from the raw material atmospheric air leading to the emergence of a new identifiable commodity, which is different from the raw material that was used. In the case of INDIAN OXYGEN LTD. VERSUS COLLECTOR OF C. EX. [1989 (6) TMI 145 - CEGAT, NEW DELHI], which has been upheld by the Hon’ble Supreme Court in COLLECTOR VERSUS INDIAN OXYGEN LTD. [1999 (9) TMI 1006 - SC ORDER] it was inter alia held that compressed gas was liable to duty under item 68 of the then Central Excise Tariff Act, 1985. The contention of the Appellant is agreed upon that the ownership of the plant and machinery used for the manufacture of 'excisable goods' cannot be a criteria for charging Central Excise duty. Accordingly, the activity undertaken by the appellant in both the cases amounts to manufacture of 'Compressed Air' chargeable to Nil rate of duty and hence, no Service Tax is leviable on such activities. As per these Contracts, the appellant operated the said HPMACs at the mining sites of ONGC and OIL to produce and supply excisable goods viz. ‘Compressed Air’, falling under the Central Excise Tariff Heading No. 28530030 chargeable to 'Nil' rate of duty, for use in the oil exploration. In both the cases, the appellant was responsible only for the production of 'Compressed Air'. Oil exploration was not the responsibility entrusted to the appellant. The appellant has not been paid based on the quantum of oil explored - the activity undertaken by the appellant cannot be categorized as “mining service” as defined under Section 65(105)(zzzy) of the Finance Act, 1994. The demands of Service Tax along with interest confirmed in the impugned order under “mining service” is not sustainable. Since the demand of Service Tax is not sustainable, the question of imposing penalties does not arise. The impugned order is set aside - appeal allowed.
|