NATIONAL CONSTRUCTION COMPANY Vs. CCE, JAIPUR

JUDGEMENT

(1.) THE facts leading to filing of this appeal are, in brief, as under.

(2.) SHRI B.L. Narasimhan and Ms. Nupur Maheshwari, Advocates, the learned Counsels for the appellant, pleaded that in terms of the appellants agreement with RSMML, the appellants job is hiring of machines like hydraulic excavators and ancillary equipment and also the staff for operation of the equipment, removal of top soil from the active mining area upto prescribed thickness and its stacking at a designated place, removal of over burden like soil, kankar, fullers earth, clay, sandstone, shale etc. through blasting, if necessary, so as to expose the lignite seams, transporting the over burden to the designated place either within the mining area or dumping it elsewhere, excavation of lignite seams exposed after removal of over burden and loading the lignite having calorific value more than 2500 kcal per kg. into trucks placed for transportation of the same, respreading the top soil removed on stablised outside dumps, Allied and preparatory works, dewatering and pumping out of water from the pits to keep the same dry, taking measures against fires and spontaneous heating of lignite and quality control of the lignite, that from the scope of work as described in Section V of the appellants agreement, it is clear that the agreement is for mining of lignite, that from Section VII of the agreement it will be seen that the appellant are paid on the basis of per M.T. of saleable lignite loaded, that the appellants contract with their client RSMML is for mining, that mining became taxable only w.e.f. 01/6/07 by insertion of Clause 65(105)(ZZZy), that though the work of mining of lignite of the required calorific value also requires clearing the top soil and removing the over burden, the predominant feature of the appellants contract with their clients is mining and hence the service performed by them has to be treated as mining, that the appellant are not paid for clearing the top soil or removing of over burden separately and they are paid only on the basis of the quantity of lignite of the desired quality produced, that, therefore, during period prior to 01/6/07 i.e. from 16/6/05 to 31/5/07 their activity cannot be taxed as site formation and clearance, excavation and earth moving service under Section 65(105)(ZZZa), that confirming service tax demand on the amount of remuneration received by the appellant for mining service for the period from 2003 to 15/06/05 by classifying the same as the Cargo Handling Service under Section 65(105)(Zr) is absolutely without any basis, as the loading of the mined lignite into the trucks is a peripheral activity and in any case handling of mined lignite etc. within the mining area is not Cargo Handling Service, as held by the Tribunal in the case of Sainik Mining & Allied Services Ltd. vs. CCE, CUS & ST, BBSR reported in : 2008 (9) S.T.R. 531 (Tri. Kolkata), wherein the Tribunal held that cargo, in commercial parlance, means as the one which is carried as freight in the ships, planes, rail or truck and movement of coal within the mining area is not handling of cargo meant for transportation, that in any case, just because of loading of mined lignite at the pits into the trucks, which is a peripheral activity, the entire activity of the appellant cannot be classified as mining service, that as regards the classification of the appellants activity during period from 16/6/05 to 31/5/07 as site formation and clearance excavation and earth moving service taxable under Section 65(105)(ZZZa), the Tribunal in the case of M. Ramakrishna Reddy vs. CCE & CUS, Tirupathi reported in : 2009 (13) S.T.R. 661 (Tri. Bang.) has held that when as per the contract of M/s. M. Ramakrishna Reddy with their client, which was for mining of ore and site formation work was also undertaken as incidental to mining activity, the site formation work during the period prior to 01/6/07 could not be taxed under Section 65(105)(ZZZa), as the contract for mining cannot be vivisected to ascertain the value of the work of removal of over burden and excavation, that in any case, for the demand for service tax on the appellants activity as mining service w.e.f. 01/6/07, the extended limitation period cannot be invoked, as there is no positive Act of suppression of any relevant fact or withholding of relevant information or contravention of the provisions of the Finance Act, 1994 or the Rules made thereunder with intent to evade the duty and for the same reason, penalty under Section 78 of the Finance Act, 1994 would not be attracted, that in this regard mere failure to take registration or non -filing of return or non -payment of service tax cannot be treated as the basis for concluding deliberate withholding of information or deliberate contravention of the provisions of the law to evade the payment of service tax and that in view of the above, the impugned order is not sustainable.

(3.) WE have considered the submissions from both the sides and perused the records.