Cenvat credit on site formation services used in mining upheld; Board circulars cannot override quasi-judicial findings.

Cenvat credit was admissible on service tax paid for excavation, drilling, removal of overburden and coal-cutting undertaken in mining operations, because those activities were treated as site formation and clearance services during the period when mining service was not separately taxable. The Revenue's challenge failed because the tax had been paid on services actually used in the assessee's operations, and the adjudicating and appellate authorities accepted that credit on that basis. The objection that the order breached Board circular instructions was rejected, as a circular cannot curtail or override a quasi-judicial determination. The impugned order was upheld and the departmental appeal failed.

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Issues: Whether Cenvat credit was admissible on service tax paid for site formation and allied activities used in mining operations during the period when mining service was not separately taxable, and whether the demand could be sustained merely on the ground that the adjudicating authority had not followed the Board's circular instructions.

Analysis: The contractors carried out excavation, drilling, removal of overburden and coal-cutting activities, which were treated as site formation and clearance services. Service tax had been paid on those services and the assessee availed credit on that basis. The adjudicating authority held that, prior to mining service being brought to tax separately, such activities were covered within site formation and clearance services and the tax paid thereon was available as credit. The appellate authority agreed and also held that a Board circular cannot curtail the -making power of a quasi-judicial authority. The sole challenge raised by Revenue was that the order was passed contrary to the circular instructions.

Conclusion: The credit was held admissible and the impugned order was upheld; the Revenue's objection based on the circular was rejected.

Final Conclusion: The assessee succeeded and the departmental appeal was dismissed, with the underlying demand remaining dropped.

Ratio Decidendi: A Board circular cannot override or nullify a quasi-judicial finding, and credit is admissible where tax has been paid on services actually used for the assessees operations in the manner recognised by the adjudicating authority.

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