THIRUMALA ENTERPRISES Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) WE have heard both sides on the application for waiver of pre -deposit of service tax of Rs. 23,70,189/ -together with interest and penalties of Rs. 1,000/ - under Section 77, Rs. 200/ - per day upto 17 -4 -2006 and 2% of tax per month or Rs. 200/ - per day whichever is higher for the tax amount from 18 -4 -2006 under Section 76, and Rs. 47,40,378/ -under Section 78 of the Finance Act, 1994. The demand of service tax has been confirmed on the ground that the applicants herein are rendering business auxiliary service. The activities of the assessees/appellants are excavation/raising of factory grade Bauxite at the mines of Madras Aluminium Company Ltd. (MALCO) by doing drilling, deep -hole blasting, removal of overburden, breaking of larger boulders to the required size, blending of Bauxite, loading of the blended Bauxite into trucks etc. Prima facie, the activities carried out by the applicants are relating to mining of minerals which prima facie has been brought into the ambit of service tax only with effect from 1 -6 -2007. The period in dispute in the present case is September 2005 to December 2006, that is, prior to 1 -6 -2007. CBEC Circular dated 12 -11 -2007 also clarifies that prior to 1 -6 -2007 activities such as excavation and earthmoving, coal cutting or mineral extraction and handling transportation from pithead to a specified location was part of mining operations and not subject to levy of service tax prior to 1 -6 -2007. In the light of the above the applicants have made out a strong prima facie case for unconditional waiver. We also note that in the case of identical service provided by VSS Engineering & Construction to MALCO, the Commissioner (Appeals) vide Order -in -Appeal No. 39/2009, dated 27 -2 -2009 has dropped the demand of service tax raised on the ground that VSS Engineering & Construction were rendering business auxiliary service accepting the assessee's contentions that they were carrying out mining activity which is not liable to service tax prior to 1 -6 -2007.

(2.) WE , therefore, grant the prayer by waiving pre -deposit of tax, interest and penalties and stay recovery of the amounts in question pending the appeal.