2018 (5) TMI 1226 - AT - Service Tax

Tribunal excludes iron ore fines value from taxable service consideration, citing fixed crushing charges

The Tribunal held that the value of iron ore fines recovered during crushing operations should not be considered as additional consideration for taxable ... Valuation - Business Auxiliary services - recovered losses - appellants have recovered huge quantities of iron ore fines and shown it as 'self-generated' - Department contended that these iron ore fines arising out of crushing operations are having market value and such value should be added in the consideration for tax purposes - Held that: - identical issue has came up before the Tribunal in assessee’s own case M/s Godawari Power & Ispat Ltd. (formerly known as Hira Industries Ltd.] Versus CCE, Raipur [2017 (5) TMI 704 - CESTAT NEW DELHI] where it was observed that the contingency of emergence of iron ore fines having some value, is not determinable at the time of fixing of crushing charges. Hence, it is not tenable to hold that the crushing charges are influenced by the possible emergence of iron ore fines and its additional value to the appellant - demand cannot sustain - appeal allowed - decided in favor of appellant. Issues: Valuation of taxable service rendered by the appellant involving iron ore fines.Analysis:The appeal was filed against an Order-in-Original by the appellant, who crushed iron ore lumps on job charges basis. The Revenue contended that the iron ore fines recovered during crushing operations should be considered for tax purposes as they have market value. The Department argued that the value of these fines should be added to the consideration for service tax. The Tribunal noted that the dispute revolved around the additional consideration in the form of iron ore fines arising during crushing operations. It was observed that the crushing charges were fixed per metric ton of iron ore lumps received, with the percentage of ground loss pre-determined in the work order. The Tribunal found that the emergence of iron ore fines within the permissible loss percentage did not directly influence the crushing charges agreed upon between the customer and the appellant. It was concluded that there was no evidence to support the claim that the value of iron ore fines impacted the crushing charges, and thus, could not be considered as additional consideration for taxable service.The Tribunal referred to a previous order in a similar case where it was held that the crushing charges were not influenced by the possible emergence of iron ore fines and their value. The Tribunal emphasized that at the time of fixing crushing charges, the exact quantum of loss or the potential accrual of iron ore fines was not determinable. It was noted that the crushing charges remained the same even in cases where no losses were agreed upon, indicating that the emergence of iron ore fines did not affect the agreed charges. The Tribunal rejected the Revenue's claim of non-monetary consideration in the form of iron ore fines influencing the crushing charges due to lack of evidence supporting such an assertion. The Tribunal, following the precedent and the Supreme Court's confirmation of the earlier order, set aside the impugned order and allowed the appeal filed by the appellant.