METTUR THERMAL POWER STATION Vs. CCE (ST), SALEM

JUDGEMENT

(1.) M /s. Mettur Thermal Power Station, Mettur Dam, the appellant herein, is a unit of Tamil Nadu Electricity Board, a Government of Tamil Nadu undertaking, engaged in the generation of electricity. During the course of generation of electricity, Fly Ash is generated as a by -product which was being dumped in the site. As per Order No. 248 dated 22.9.1997, as amended by Order GO (MS) 629 dated 29.7.1999, issued by Industry Department, Government of Tamil Nadu, the appellant supplied this Fly Ash to cement and asbestos sheet companies for manufacturing cement, bricks etc. and charged Rs. 60/ - per tonne on Dry Fly Ash and Rs. 40/ - per Tonne on Wet Fly Ash. A Show Cause Notice dated 7.10.2010 was issued by the Commissioner of Central Excise, Salem proposing demand of service tax along with interest and penalty for the period May 2006 to June 2008 on this amount charged for the supply of Fly Ash under the category of Business Support Service. By the impugned order, the Commissioner confirmed the demand of service tax of Rs. 1,42,29,961/ - along with interest and extended cum -tax benefit and also granted relief from penalty under Section 76 and 78 in terms of Section 80 of the Finance Act, 1994. The learned senior counsel submits that GO (MS) No. 629 dated 29.7.1999 was issued by the Government of Tamil Nadu providing guidelines for disposal and utilization of Fly ash. In terms of GO (MS) dated 29.7.1999, they collected the rates Rs. 60/ - and Rs. 40/ - per tonne on Dry Fly Ash and Wet Fly Ash respectively from cement and asbestos sheet companies. There is another provision in the said GO (MS) to supply fly ash free of cost for the purpose of laying roads, embankments or for any other construction activity. He submits that GO (MS) dated 29.7.1999 was issued as per the policy of Government of India and they are not rendering any service to anybody. In other words, they are disposing of Fly ash as per Government order and therefore there is no question of levy of service tax. He further submits that the Commissioner erroneously observed that it is an infrastructural support service to the cement companies. He further submits that the entire dispute is raised on the basis of a communication dated 29.3.2007 issued by the Deputy Commissioner of Central Excise, Anaimedu, Salem, showing these activities as service charges collected for fly ash removal. It is submitted that on the basis of that letter and the subsequent correspondences by the officers of the applicant mentioned these collections as service charges for disposal of Fly Ash. He also drew attention to the Bench page no. 46 of the compilation and submits that the amount so collected is revenue to the Tamil Nadu Electricity Board. He also drew the attention of the Bench that the cement companies and asbestos companies are paying procurement tax on fly ash procured as revealed from the GO (MS). The learned senior counsel placed a copy of the show -cause notice dated 17.4.2012 issued to the sister unit at Tuticorin proposing demand of Central Excise duty on such Fly ash on the ground that it is a manufactured product. He also submits that there is no suppression of fact with intent to evade payment of service tax and it is also revealed from the show -cause notice issued to the sister unit that there is a dispute whether tax is leviable or excise duty is payable and no penalty was imposed invoking Section 80 of the Finance Act, 1994 and therefore extended period cannot be invoked. He submits that the Commissioner has not given any finding on how he arrived at the conclusion that the activity of the appellant is classifiable as infrastructural service as defined under Section 65(104)(c) of Finance Act, 1994.

(2.) ON the other hand, the learned Authorized Representative on behalf of the Revenue reiterates the findings of the Commissioner. He submits that there are several correspondences between the department and the appellant from which it is very clear that the appellant repeatedly mentioned that the amount was collected as service charges. In this context, he particularly drew the attention of the Bench to letter dated 27.3.2008 to show that this amount was collected as service charges. He also submits that as revealed from the Gazette of India dated 14.9.1999, these Dry Fly Ash could not be sold and therefore the rates were cost of services. He placed a letter dated 10.5.2007 of the Chief Engineer of Mettur Thermal Power Station stating that service charges collected towards disposal of Fly Ash was for providing infrastructural support service etc. It is his contention that the appellant rendered the service to the cement companies for providing infrastructural support to collect fly ash. During the investigation, the officers unearthed evidences to prove that collection of rates was not for sale of fly ash but for providing infrastructural support as evident from the correspondences and hence extended period has been rightly invoked. After hearing both the sides and on perusal of records, it is seen that Fly ash generated at the Thermal Power Plant containing several heavy metals, caused a potential threat to the environment when disposed of in open areas or dumped into water bodies. Since Fly ash can be used as raw material for manufacture of building materials, such as cement industry, brick manufacturing units etc. Government of India announced various measures all over the country to promote the use of Fly ash in building materials in order to avoid disposal of Fly ash in open areas which would affect the environment.

(3.) CONSIDERING the adverse impact of Fly ash on the environment if released and dumped in pits and other related problem like huge requirement of land for ash ponds etc. and taking into account the various representations received and after examining carefully all aspects, the Government announces the following policy/guidelines to help promote fly ash to brick/building materials and other products manufacturing units: -