TMI Blog2016 (12) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... a composite contract will amount to providing ‘Mining Services’ which were made chargeable to Service Tax only with effect from 18.06.2002. Time bar - Held that: - We have not gone into the time bar aspect of the demand as on merits the appeal has been allowed in favour of the appellant. Appeal allowed - decided in favor of appellant. - Appeal No.ST/10/12 - ORDER NO.FO/A/76018/2016 - Dated:- 15-9-2016 - SHRI H.K. THAKUR, MEMBER (TECHNICAL) AND SHRI P.K. CHOUDHARY, MEMBER (JUDICIAL) Dr. Samir Chakraborty, Sr. Advocate for the Appellant(s) Shri K. Chaudhary, Supdt.(AR) for the Revenue Per Shri H.K. Thakur. This Appeal has been filed by the Appellant against Order-in-Original No.Commr/B-1/ST-12/2011 dated 10.10.2011 passed by the Commissioner of Central Excise, Customs Service Tax, Bhubaneswar-I as Adjudicating authority. Under this Order-in-Original dated 10.10.2011 Adjudicating authority has, inter alia , confirmed a Service Tax demand of ₹ 51,60,777/- (Rupees Fifty One Lakhs Sixty Thousand Seven Hundred and Seventy Seven only) against the Appellant under Section 73(2), along with interest under Section 75 of the Finance Act, 1994. An equivale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t into the Statute book. It was also the case of the learned Advocate that a composite contract is not divisible and no Service Tax on individual activities can be demanded from the appellant prior to 18.06.2007 and that appellant has started paying duty, on their activities as Mining Services after 18.6.2007. Learned Sr. Advocate relied upon, inter alia, the following case laws in support of his various arguments:- (i) Associated Soapstone Distributing Co.P.Ltd. vs. CCE, Jaipur-II [2014 (34) STR 865 (Tri.-Del.)] (ii) CCE, Hyderabad vs. Vijay Leasing Company [2011 (22) STR 553 (Tri.-Bang.)] (iii) M. Ramakrishna Reddy vs. CCE C, Tirupathi [2009 (13) STR 661(Tri.-Bang.)] (iv) Orissa Stevedors Ltd. vs. CCE, C ST, BBSR-I [2015 (38) STR 964(Tri.-Kolkata) (v) CCE Cus, Kerala vs. Larsen Toubro Ltd. [2015 (39) STR 913 (SC)] 2.2 It is also the case of the appellant that CBEC Circulars 232/2/2006 Ex.4 dated 12.11.2007 and 334/1/2007-TRU dated 28.02.2007 are not applicable to the present facts as those Circulars do not deal with composite contracts which have been appropriately clarified as per para (iv) of CBEC Circular No.123/5/2010-TRU dated 24.05.2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most of the gangue minerals are not completely liberated in the case of goethitic and lateritic ores, even at final fractions. 2.4.1 It is thus the case of the appellant that words like laterised Hard ore, Flaky/Friable and Mixed ore used in the contract mean ore required to be excavated and transported into designated dumpyard. 2.5 That demand is time barred as the issue is one of interpretation of classification of services and extended period and penalty cannot be invoked. Appellant relied upon the following case laws:- (i) Jaiprakash Industries Ltd. vs. Commissioner of Central Excise [2002 (146) ELT 481 (SC)] (ii) Continental Foundation Jt. Venture vs. Commissioner of Central Excise, [2007 (216) ELT 177 (SC)] (iii) Commissioner of Central Excise vs. Afcons Pauling Joint Venture [2009 (242) ELT 352 (P H) (iv) Mentha and Allied Products Ltd. v. Commissioner of Central Excise [2004 (167) ELT 494 (SC)] 3. Shri K. Choudhary, Supdt.(AR) appearing on behalf of the Revenue argued that as per the contract entered between the appellant and Tata Steel the scope of work was only to prepare site and any ore which got extracted was an activity incidental to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mine is a highly mechanized mine of Tata Steel, operating at about 18 KM from Joda, in the state of Orissa. The Steel Company is looking for interested parties for hiring related equipments for excavation. The scope of the contract will be from site preparation, making holes for blasting, excavation of rejects comprising of Laterite. Linerised Hard Ore, BHJ/BHQ, Shale, Flaky/Frable and incidental Hard Ore and transportation of the same to the designated dump yards. 1.0 GENERAL The Tata Iron Steel Company Ltd., hereafter to referred as the steel Company and the party interested to perform this Work, referred hereafter as party . a) The scope of the contract will be from site preparation, making holes for blasting, excavation of rejects and incidental ore transportation to the designated dump. 2. SCOPE OF THE WORK As petitioner referrer herein the party is required to do the following jobs. a) The party is require to deploy suitable machinery equivalent for site preparation, dozing, making holes, excavating, lkoading, transporting and dumping blasted rejects comprising of laterite, Laterised Hard Ore, Mixed Ore BHJ/BHQ, Shale, Flaky/Frai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rejects; comprising of laterite, laterised Hard ore, Shale, Flaky Friable and incidental Hard Ore; and transportation of the same to the designated dump yard. Under the heading Scope of the work while handling of Mixed ore/Hard ore, encountered during the course of excavation, appellant is required to make free the ore from contamination, 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 overb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or activity of site formation, excavation and clearance and therefore, it is not a composite contract and the Commissioner has rightly demanded the service tax on this activity under Section 65(97a) of the Act. He submits that the decision cited by the appellants is distinguishable for the facts of the present case as amounts are separately shown for excavation and mining activity. 5. After hearing both sides, we find that issue involved is whether activity undertaken by the appellants falls under the Site Formation, Clearance and Excavation and Earthmoving and Demolition services as contended by Revenue or under Mining Service as contended by the appellants. For the sake of convenience, Section 65(97a), 65(105)(zzza) and Section 65(105)(zzzy) are reproduced below :- Section 65(97a) Site formation and clearance, excavation and earth moving and demolition includes (i) Drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or (ii) Soil stabilization; or (iii) Horizontal drilling for the passage of cables or drain pipes; or (iv) Land reclamation work; or (v) Contaminated top soil stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words, the appellant is expected not only to remove the overburden but also to excavate the Barytes Ore. We cannot say that the appellant is not undertaking site formation work, but site formation work undertaken by the appellant is incidental to the mining activity. To put it in different words, the essential character of the work undertaken by the appellant is mining or winning of minerals. The mining services became taxable only with effect from 1-6-2007. The period in the present case is prior to 1-6-2007. It cannot be said that the entire service rendered by the appellant comes under the category of site formation. If that were so, one cannot say that it also falls under Mining Services. In any case, Section 65A (2) of Chapter V of the Finance Act, 1994 reads as follows : When for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of Section 65, classification shall be effected as follows : (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, 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. 6.1 In view of the above ratio laid down by Apex Court Service Tax as Site formation Service could be levied if there is a Service Contract Simplicator to that effect. However, once the contract is a composite contract for the entire activities from Site formation to segregation of Ores then the same has to be charged as a separate service (Mining Services), which was made chargeable to Service Tax w.e.f. 18.06.2007 only. Such operations u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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