TaxTMI 
TaxTMI 
2021 (1) TMI 179
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.... Ltd. by ICML, sizing of coal cannot be termed as a service taxable under the heading 'Business Auxiliary Service' in terms of the Finance Act, 1994 ("the Act"). 2. The facts of the case in brief are: (a) ICML is engaged in the business of mining and sale of coal classifiable under Chapter Heading 27011200 of the Central Excise Tariff. Pursuant to allocation of a coal mine block by the Government of India, Ministry of Coal, for mining of coal, ICML was granted mining leases by the Government of West Bengal, in accordance with the relevant statutory provisions in this regard, for extraction of coal from the said block, known as the Sarshatali Coal Mine. (b) On August 14, 2002 ICML entered into an agreement with CESC Ltd., Kolkata, to mine coal from the said mines and to sell the same to CESC Ltd. ("CESC") for use in its power projects on terms and conditions specified in the agreement. (c) Similar agreement was subsequently entered into by ICML with Crescent Power Ltd. ("CPL"), a wholly owned subsidiary of CESC on March 30, 2010, for sale of certain inferior quality coal, commonly known as "carbonaceous shale" or "shaly coal" (hereinafter referred to as "carbonaceous shale") ....
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.... in the category of "Business Auxiliary Service" under Section 65(19) of the Act, which was applicable during the period from 2007-08 to 2010-11 and hence was chargeable to service tax as per Section 66 of the Act, as then in force. (h) On ICML submitting its reply by a letter dated December 6, 2012 and a personal hearing being held thereafter, the Commissioner passed the impugned order dated 19.12.2013 dropping the proceedings. 3. Shri K. Chowdhury, Ld. A.R. appears on behalf of the Revenue in support of the appeal. Dr. Samir Chakraborty, Senior Advocate, along with Shri Arnab Chakraborty and Shri Abhijit Biswas, Advocates appear on behalf of the Respondent, M/s ICML. 4. Shri K. Chowdhury Ld. A.R. reiterates the grounds of appeal and contends that the Adjudicating Authority had erred in holding that sizing of coal is a process incidental and ancillary to manufacture of coal and that coal is a manufactured product and thereby dropping the demand of service tax made in the show cause notice. In support of his contention the Ld. A.R. has relied upon the observations of the Review Committee, set out in the appeal petition. According to the Review Committee: (i) Coal, produced or....
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....ther contended that: (i) The contention that the sizing of coal as per specification contained in the relevant contracts is production or processing of goods for and on behalf of the clients under Section 65(19)(v) of the Act as misconceived and untenable. (ii) Works relating to mining of coal is manufacture within the meaning of the Central Excise Act and coal is an excisable product. Sizing of coal is a part of such manufacture of coal within the meaning of the Central Excise Act and, hence, Section 65(19(v) of the Finance Act is inapplicable. In support of this, reliance has been placed on the order passed by this Bench of the Tribunal in Avian Overseas Pvt. Ltd. Vs. Commr. of C.Ex., Cus & S.T., 2009 (15) STR 540 (T-Kol). Reliance in this regard has also been placed on Review Committee's observation contained in the Revenue's appeal petition as under: "So far as inclusion of sizing charges into the gross value of the product on which excise duty is paid, it is observed that for a major part of the period for which the demand is raised, coal though excisable, was subject to zero excise duty". It is contended that there is thus acknowledgement on the part of the appellant....
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....is at all material point of time on ICML's account as owner of the said goods and not for and on behalf of CESC or anybody else. 7.1 Similarly in the case of sale of carbonaceous shale (inferior quality of coal) by ICML to CPL under the Agreement dated March 30, 2010, it is seen that the sale and purchase of carbonaceous shale takes place on delivery of the goods at the designated place within the power plant premises of CPL, when title/ownership and risk of loss passes from ICML to CPL. Until then ICML continues to be responsible for transportation and delivery of the goods to the said designated place. The contracted price in this case also includes sizing charges. 7.2 Section 65(19)(v) of the Finance Act includes, as "Business Auxiliary Service", production or processing of goods "for and on behalf of client". The requirement for application of this clause is that the goods in question has to belong to the client of the appellant assessee, on which production or processing which does not amount to manufacture of goods within the meaning of Section 2(f) of the Central Excise Act is carried out by the appellant assessee. This requirement is not satisfied in the instant case. At ....
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....y issuance of show cause notices were initiated by the jurisdictional Commissioner/Principal Commissioner of Central Excise against ICML alleging undervaluation of the transaction values declared for the said period, of bituminous coal manufactured and cleared from the mine, by non-inclusion of elements, namely, royalty, stowing excise duty, primary education cess, rural employment cess, public works cess, road cess and AMBH fees and thereby short paying "central excise duty" to the extent contained in the show cause notices. The proceedings under the said show cause notices have resulted in adjudication orders, passed by the Commissioner of Central Excise, Kolkata-I Commissionerate/Principal Commissioner of Central Excise, Kolkata-I, dated 16.12.2014, 14.10.2015 and 27.05.2016 respectively. There the stand of the Central Excise Department is that ICML is engaged in the manufacture of bituminous coal classifiable under Chapter Sub-Heading 27011200 of the First Schedule to the Central Excise Tariff Act, 1985, for which it is holder of central excise registration number, and that ICML had manufactured and cleared the said goods on payment of central excise duty computed on the assess....
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.... observed that sales tax and service tax cannot be made applicable on the same transaction as the same is includible to each other. 5. In the instant case undisputedly, the appellant has paid the sales tax/vat when it is so crushing charges are not leviable. Regarding the payment of sales tax/vat, the Ld. Counsel for the appellant has shown proof to the Ld. Counsel for the Department. 6. By following the ratio laid down by the Hon'ble Supreme Court, we find no reason to sustain the impugned order." 10.2 This decision has since been followed by the Principal Bench of the Tribunal, in cases involving the same issue: (i) Northern Coalfields Ltd. Vs. Commissioner, CGST, CE&C, 2020-TIOL-338-CESTAT-DEL (ii) South Eastern Coalfields Ltd. Vs. CCE&ST, 2018-TIOL-1691-CESTAT-DEL (iii) Northern Coalfields Ltd. Vs. CGST, CC&CE, 2018 (8) TMI 1742 - CESTAT - DELHI. 11.3 In this regard reference is also made to the decision of a coordinate bench of the Tribunal in CCE Vs. Spectron Engineers Pvt. Ltd., 2020 (33) GSTL 223 (T). In para 4 of the order it has been observed as follows: "4. Having heard both sides, we find ourselves confronted with a dispute in which the jurisdictional cent....