TMI Blog2019 (9) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... all during the continuation of this Agreement, systematically extract, excavate, raise, grade, sort, etc. minerals from the mines. In terms of Article 8, the first party shall pay a sum of ₹ 110 per metric tonne of iron ore and ₹ 125 per metric tonne for iron ore fines. Ongoing through bills available on records, it is seen that the appellants are paid for the quantity of iron ore lumps and C‟ Ore extraction, iron ore extraction charges and iron ore fines extraction for various periods. The main contention of the appellants in this case is that they are manufacturing iron ore and in view of the Hon‟ble Supreme Court‟ decision in the case of EMPIRE INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1985 (5) TMI 215 - SUPREME COURT] and Others the activity undertaken by them amounts to manufacture and therefore, it is beyond the scope of the levy of Service Tax - HELD THAT:- We find that as the appellants are engaged in mining of iron ore. The activity involved includes transfer of goods and show-cause notice does not specify as to the value of the goods involved and has not excluded the same from the taxable value. Service Tax, if at all, can be levied on them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted with. Apparently, the activity undertaken by the appellants is essentially that of mining. It cannot be vivisected into different elements and cannot be charged to duty under any other service during relevant period - Therefore, prior to 1.6.2007, no service tax can be collected under the heads Site Formation and Clearance, excavation and earth moving and demolition service or Business Auxiliary Services - Appeal allowed. Business Auxiliary Service - HELD THAT:- The facts of this appeal are invariance with the facts discussed above in the case of Appeal No.ST/3568/2012. In ST/3568/2012, though the show-cause notice has discussed different types of services, the adjudicating authority and the appellate authority have come to a conclusion that the services fall under one category i.e., Mining of Ores, Minerals or Gas - there was no confusion in the mind of the adjudicating authority as to under which, the service of the appellant‟s falls in. Appeal disposed off. - ST/489/2009-DB; ST/490/2009; ST/172/2009; ST/3568/2012; ST/20792/2017 - Final Order No. 20769 – 20773 / 2019 - Dated:- 24-9-2019 - SHRI S.S GARG, JUDICIAL MEMBER AND SHRI P. ANJANI KUMAR, TECHNIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants has the essential ingredients of mining service taxable as per Section 65 (105) (zzzy) of Finance Act, 1994. The Department has filed Appeal No.ST/20792/17 against the order. 2. Brief facts in Balaji Mines and Minerals Ltd. are that the appellants had entered into agreements with M/s E. Ramamurthy, M/s Jyoti Brothers and M/s T.V.Channanja Shettappaa and Brothers, individual Mine Owners, for undertaking excavation, drilling, blasting, sorting and screening of iron ores and supply of the same to the Mine owners for further sale to M/s Salgaocar Mining Industries Pvt. Ltd., Goa. Department issued a SCN dated 13.06.2008 (for the period 01.04.2006 to 31.03.2007, alleging that activities of excavation, extraction, producing and processing of crude iron ore into two or more types of iron or is classifiable under Site Formation and Clearance, Excavation and Earthmoving and Demolition Service as defined under Section 65 (19) of the Finance Act, 1994 and Business Auxiliary service. Another SCN dated 03.10.2008 was issued (covering the period June 2007 to March 2008) alleging that the activity of surveying for the purpose of commercial exploitation of iron ore depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to submit certain details which were submitted on 12.12.2006; therefore, SCN dated 28.09.2007 is time barred. He also submits that as there is no mens rea, no penalty can be imposed and interest can be charged. 3.1. Coming to the Appeal No. ST/3568/2012, Learned Counsel submits that the demand of Service Tax has been made under three categories of service but was confirmed under one heading i.e. Mining Service which is beyond the SCN; the production of ores results in excisable goods being chargeable to Excise duty therefore Service Tax cannot be levied. He also submits that the contract is vivisectable and demand is under three separate categories and therefore confirmation of demand under one category of Mining Service is beyond the SCN. He relied upon the following cases: Aluminium Corporation of India Ltd. Vs Coal Board AIR, 1959 Calcutta 222 (Vol. 46 C.58) Empire Industries Ltd. Vs UOI, 1985(20) ELT 179 (SC). Commissioner of Income Tax Vs Sesa Goa Ltd. (2004) 13 Supreme Court cases 548 Moti Lainates Pvt. Ltd. Vs Collector of Central Excise. Barnagore Jute Factory Co. Vs Inspector of C.Ex., 1992 (57) ELT 3 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transportation (GTA) has been paid when there is no dispute in this regard. He further submits that whereas the show-cause notice dated 13.6.2008 (appeal No.489/2009) has classified activities of drilling, blasting, excavation of iron ore and raising of iron ore undertaken by the appellants for the mine owners under Site Formation and Clearance, Excavation and Earth moving and demolition under Section 65(97a); the activity of crushing, screening, sorting, grading, producing or processing of iron ore under Business Auxiliary Service under Section 65(19). However, while confirming the Commissioner has consolidated the demand without determining the value of each service and tax payable thereof. The Learned Counsel further submits that in respect of SCN dated 3.10.2008 (appeal ST/490/2009) while the show-cause notice has discussed the services under various activities like: (i) Survey and exploration of mineral as defined in Section 65(104a) read with Section 65(105)(zzv) of the Finance Act, 1994; (ii) Drilling, blasting, excavation of iron ore, undertaken under Site Formation and Clearance, Excavation and earth moving and Demolition services as defined under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E, Pondicherry: 2007 (7) STR 369 (Tri.-Chennai) affirmed by Hon ble Supreme Court as reported in 2017 (4) GSTL J75 (SC) iii. CCE, Ludhiana vs. Bishambar Lal Arora: 2014 (36) STR 1050 (Tri.-Del.) 4.3. Moreover, Hon ble Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd.: 2018 (10) GSTL 401 (SC) held that the value of taxable service cannot be anything more or less than consideration paid as quit pro quo for rendering such service. 5. Learned AR for the Department has reiterated the findings of OIO and OIA in respect of Appeal Nos. ST/172/09 ST/3568/12. He further submits that there is no dispute that the appellants have rendered the Mining Services and that the same has been to help the business of their principals and therefore it is rightly categorized under Business Auxiliary Service . He submits that just because a service Mining Service was carved out from Business Auxiliary Service , it does not mean that the activity undertaken is not subjected to Service Tax earlier if the same is falling under one Head or the other. He also submits that even if the activity undertaken by the appellants amounted to manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. B1/6/2005-TRU dated 27th July 2005, the activities that amount to manufacture within the Central Excise Act were not covered within the scope of taxable service. We find that Hon‟ble Calcutta High Court in the case of Aluminium Corporation India Ltd. Vs Coal Board, AIR-1959- Calcutta-222 observed that Although, coal is undoubtedly a natural product, the operations required to bring it to the surface and to make it marketable or even usable is so elaborate of expensive that to speak of the mining and condition of coal as its production is wholly appropriate. Further, Hon‟ble Supreme Court in the case of Empire Industries (supra) held that any process or processes creating something else having distinctive name, character and use would be manufactured. Hon‟ble Supreme Court in the case Sesa Goa Ltd. (supra) held that extraction and processing of iron ore would amount to production. We find that the appellants are undertaking process that would create iron ore ready to be marketed by their principals. In fact, the contract is for raising of the iron ore. The contract does not speak of any particular service. 7.1. Learned Commissioner has not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MTPA or such manufactured product is totally exempt. The impugned goods are clearly manufactured product conforming to the definition under Section 2(f) of the Central Excise Act, 1944. In view of the constitutional scheme for levy of duty, the impugned goods containing alcohol are not chargeable to duty under the Central Excise Act, 1944 but are charged to duty under the MTPA. In our considered view, since the impugned goods are manufactured products, the activity of manufacturing the same by the appellants for their clients clearly falls outside the purview of the levy of service tax under the category Business Auxiliary Service‟ under the Finance Act, 1994. Our view as above is also supported by the earlier decisions of the Tribunal in the case of Rubicon Formulations Pvt. Ltd. v. C.C., C.E S.T., Aurangabad, 2010 (19) S.T.R. 515 and SPA Pharmaceuticals Pvt. Ltd. v. Commissioner of Central Excise Service Tax, Aurangabad, 2010 (18) S.T.R. 421, both of which have been rendered considering the Board‟s Circular Letter F. No. 249/1/2006-CX.4, dated 27-10-2008. 7.4. Further, Tribunal in the case of Mehta Plast Corporation (supra) held in Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the category Business Auxiliary Service . The lower authorities had wrongly demanded tax treating part of the activity involved as amounting to production/processing of goods for, or on behalf, its client. We find that the demand of service tax under Business Auxiliary Service from the appellants is not sustainable. Therefore, the penalty imposed on SVM under Section 76 of the Act is not sustainable. The same is accordingly set aside and appeal filed by the SVM allowed. 7.7. Similar view was taken by the Tribunal in the case of Hazaribagh Mining Engineering Pvt. Ltd. 2017 (49) STR 289 wherein it has been held that once the contract is a composite contract for the entire activities from site formation to segregation of ores, the same has to be charged as separate service (Mining Service), which was made chargeable to Service Tax w.e.f from 18.06.2007. Tribunal in the case of Reply and Company Ltd.: 2019 (24) GSTL 565 (Tri.-Kol.) has held that the activities carried out are in the nature of mining services and therefore, liable to service tax only from 1.6.2007. From the holistic reading of the various judgments discussed above, we find that as the appellants are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice covering the period 1.6.2007 to 30.9.2007 duty was demanded under three separate services as mentioned above. However, the adjudicating authority has confirmed all the demands under Mining of Mineral, Oil or Gas service. The adjudicating authority has confirmed the demand finding that in terms of provisions of Section 65A of the Finance Act, 1994 in case of composite services, there cannot be dissection or service but have to be determined based on the service which gives the essential character. He found that the raising contract has the essential character of mining, therefore, he has confirmed the duty under Mining Service. As per the discussion above, we find that Tribunal has been consistently maintaining that the Service Tax on Mining cannot be demanded under Business Auxiliary Service as Service Tax under Mining Service came to be specifically levied from 1.06.2007. The activity undertaken by the appellants is undoubtedly Mining. We find that the SCN has sought to demand duty under three different services. However, the adjudicating authority has found that the essential character of the service is mining therefore the entire activity should be considered u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed by the Department is rejected. ST/490/2009 10. As discussed above, the period covered in this impugned order is 1st April 2006 to 31st March 2007. In the instant case also, the contract is for raising of iron ore by the appellants for the persons with whom they have contracted with. Apparently, the activity undertaken by the appellants is essentially that of mining. It cannot be vivisected into different elements and cannot be charged to duty under any other service during relevant period. As held in the cases discussed above, the contract being for the mining and essential character of the service rendered by the appellants is that of mining, it can only be taxable under Mining of Minerals, Oil or Gas Service . Therefore, prior to 1.6.2007, no service tax can be collected under the heads Site Formation and Clearance, excavation and earth moving and demolition service or Business Auxiliary Services . In the result, appeal No.ST/490/2009 is allowed. ST/489/2009 11. In this case, as contended by the appellant the show-cause notice alleges four types of services to have been rendered by the appellants. The services are (i) S ..... 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