TaxTMI 
TaxTMI 
2025 (6) TMI 2049
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.... 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. 2.2 Similar agreement was subsequently entered into by the appellant 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') from the said coal mine to CPL, on terms and conditions specified in the said agreement dated 30.03.2010. 2.3 The coal that comes directly from mines, after blasting, known as the run-of-mine coal ("ROM"), are of irregular sizes, including large fragments. In terms of the above-stated agreements, the appellant has to supply coal of specifications and quality, depending upon the intended use thereof, as specified. Since the ROM coal does not conform to the size and specification required to be delivered to the buyers and cannot be sold and transported as such, the said ROM coal has therefore to be prepared. Such preparation includes segregation of the coal from the stones, whereupon they are crushed/sized as per the desired requirement of the....
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....rms of Section 6(3)(i) amounting to Rs. 7,34,60,689/-, total demand amounting to Rs. 267,93,07,672/- & penalty of Rs. 161,50,05,669/-. 2.9 Against the said order, the appellant is before us. 3. The ld.Counsel for the appellant submits as under : (i) There was duplication of demand in respect of this component having also been confirmed under the category "Mining services" in the first bucket of SCNs. That the Ld. Commissioner has dropped the service tax demand under second bucket of SCNs as the self-same issue stood decided by this Hon'ble Tribunal vide Final Order dated 05.01.2021 upholding the Order-in-Original dated 19.12.2013 for the earlier period i.e. 2007-08 to 2011-12 which inter alia held that (i) Sizing of coal is an incidental and ancillary process to make coal marketable and thus complete "manufacture" of coal and therefore, activity of raising of coal, including crushing thereof, carried out by the Appellant in the Sarshatali coal mine amounted to "manufacture" of excisable goods; (ii) the Appellant is duly registered under the central excise provisions with the jurisdictional Central Excise authorities and the Appellant was paying central excise duty upto June 2017....
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....d to be "Business Auxiliary service") vis-à-vis activity of extraction of coal (alleged to be "Mining service") in the present issue. Hence, dropping of 2nd bucket of SCN does not have any effect on the present allegation (although while quantifying demand under this bucket, even sizing charges were considered). The activity conducted by the Appellant falls under "Mining Service" and is leviable to service tax even if Central Excise duty has been paid on the same activity. No ruling has been presented by the Appellant which holds that after Mining services were notified as Taxable services, the activities of mining would not be liable to Service Tax if appropriate Central Excise duty has been paid on the minerals, oil or gas so mined or extracted, or if the process of extraction or mining of minerals, oil or gas is construed as amounting to manufacture. Such argument would render the "Mining services" notified by the Act of Legislature as redundant and inoperable On this basis, the Ld. Commissioner rejected the applicability of various decisions relied upon by the Appellant. Further, the Ld. Commissioner observed that there are a number of judgements which categorically ....
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....submitted by the Appellant evidencing maintenance of separate accounts in accordance with Rule 6(2) of the CCR. Mining Service (a) The Appellant was formed to develop and operate the Sarshatali Coal Block for the captive supply of coal to CESC Ltd and its associate companies (b) The Appellant has been a manufacture/producer of coal from the said Coal Mine, throughout the relevant period i.e. April 2008 to June 2017. The mining lease in respect of the said Coal Block was held by the Appellant from the government of West Bengal in its own name upto March 2015 and thereafter by CESC pursuant to an auction by the government of India, consequent to the Hon'ble Supreme Court ruling in Manohar Lal Sharma vs. The Principal Secretary & Ors. [WP (CRL) No. 120 of 2012]. Therefore, the Appellant continued to operate and raise coal from the said coal block even after April 2015, albeit as a contractor. (c) Since the activity of raising coal amounted to manufacture under Chapter heading 2701 of the CETA, the Appellant as a manufacturer/producer had been discharging central excise duty on the activity of raising and supply of sized/crushed coal, right from its introduction in March 2011. F....
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....CPL upto March 2015 when it held the mining lease in its own name, which is evident from the Final Order dated 5 January 2021 of this Tribunal. It is a settled principle that levy of VAT and service tax are mutually exclusive levies and therefore, since VAT has already been levied on the entire sale value, there can be no levy of service tax on the same. The same has not been dealt with in the impugned OIO. Reliance is placed on: * Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes [2008 (9) S.T.R. 337 (S.C.)] * Bharat Sanchar Nigam Ltd. (BSNL) v. Union of India [2006 (2) S.T.R. 161 (S.C.)] * C.C.E. &S.T., Bolpur v. M/s Integrated Coal Mining Ltd. [ 2021 (1) TMI 179] * C.C.E. &S.T. v. Mahanadi Coalfields Ltd. [2017 (8) TMI 1625] (e) The Excise duty and service tax are mutually exclusive levies and could not be demanded simultaneously on self-same activity. (f) The Appellant was paying excise duty from March, 2011 onwards, when excise duty on coal was imposed as also clean energy cess since 2010. It is not in dispute that the Appellant continued to discharge excise duty on the activity of raising of coal including the sizing and transportation thereof and the ....
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....ture is specifically covered in the Negative list under Section 66D(f) of the Finance Act, 1994 i.e. "services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption" and hence are outside the purview of the Act. The same has not been dealt with in the OIO. (j) Demand pertaining to the period from 01/04/2008 to 31/03/2012 is barred by limitation. (k) All relevant facts were known to the Revenue authorities at or prior to August 2012 itself, on the basis whereof the earlier show cause notice dated 21.08.2012, which culminated into Order dated 19.12.2013, was issued in the Appellant's own case. It is a settled principle that when on the self-same set of facts and materials a show cause notice has been issued earlier invoking extended period of limitation, there cannot be allegation of willful misstatement or suppression of any material fact or contravention of the provisions of the Act or the rules framed thereunder by an assessee to evade payment of tax and consequently there can be no invocation of the extended period of limitation under, inter alia, the Proviso to Section 73(1) of the Act, in subseque....
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....f. It is settled that the levy of excise duty and service tax are mutually exclusive and manufacturer need not necessarily be owner of coal. Reliance is placed on M/s Assam Air Products (P) Ltd Vs. CCE & ST [Para 6,6.2 - 2024 (3) TMI 72]. (m) Decisions relied upon by the Ld. Commissioner are not applicable to the facts of the present case. (n) Decisions relied upon by the Ld. Commissioner have no application to the facts of the present case as those were rendered in different factual context. The assessee therein was not a manufacturer of excisable goods and was not discharging VAT and Excise duty (introduced on coal w.e.f. March 2011) on the self-same activity as is involved in the present case. The same can be demonstrated by the following: Sl. No. Decisions relied upon by the Department Period of dispute Activity involved therein 1. Calcutta Industrial Supply Corpn. Vs. Commr. of S.T. (supra) Upto March, 2007 Soil excavation, removal of over-burden, transportation, drilling and blasting of coal, etc. 2. Kanak Khaniz Udyog Vs. CCE (supra) 07.06.2004 to 30.09.2007 Prospecting mineral deposit, dewatering of mineral, removal of over-burden, raising of china clay expo....
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....ub categories. (ii) The SCN has completely lost sight of the fact that in the event the coal does not have the specified volatile matter limit and/or calorific value, it can classified under other sub-headings(iii) The Appellant was involved in the manufacture of bituminous coal classifiable under Chapter heading 2701 of the CETA and was paying excise duty thereon, which also stands confirmed by the adjudication orders passed by the central excise authorities and assessments carried out under the central excise law during the relevant period.The Ld. Commissioner has rightly not paid heed to such twisted interpretation as alleged in the SCN, but on the contrary has asserted that payment of central excise duty does not take away the liability to pay service tax under the category of "Mining Services", which has been dealt with hereinabove. Computational errors in the demand (q) Without prejudice to the above, there are computational errors in the demands covered by impugned OIO. The following have not been excluded from the taxable value while computing the service tax demand with respect to mining services. (r) Amounts pertaining to Central Excise Duty on coal, Cess on coal, se....
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.... those for exempted goods/services, i.e. service of providing solar power in Gujarat and that the Appellant has not claimed CENVAT credit in respect of the transactions relating to solar power business. Further, the same was also submitted before the Ld. Commissioner at the time of adjudication. However, the said factum is conspicuously missing in the impugned OIO and the said Order has been passed without considering the same. Further, it is settled that the certificate of an expert could not have been discarded without any specific and cogent evidence. Reliance is placed on the ruling of this Hon'ble Tribunal in M/s Harinagar Sugar Mills Limited [Para 7 - Final Order No. 75562/2020]and M/s Electro Steel Casting Ltd [Para 17 - Final Order No. 77070/2024]. Sponsorship Service (v) The Revenue authorities have failed to discharge onus to prove taxability of Sponsorship service. Further, the Appellant has furnished documents to demonstrate that the payment was towards financial assistance and not sponsorship service. Nowhere in the impugned OIO has it been shown that the expenses incurred by the Appellant towards business development are in any way related to sponsorship services....
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....ion ; (e) Whether in the facts and circumstances of the case, the penalty can be imposed on the appellant or not ? Issue (a) Whether the appellant is liable to pay service tax under "Mining Services" for the period 2008-2009 to June, 2017 or not ? 7. The facts which are admitted are that the appellant was engaged in the business of mining and sale of coal classifying under Chapter Heading 27011200 of the Central Excise Tariff Act. The coal comes directly from mines after blasting known as the run-of-mine (ROM) coal, are of irregular sizes, including large fragments. The appellant has to supply coal of specifications and quality depending upon the intended use thereof. Since the ROM coal does not conform to the size and specification required to be delivered to the buyers and cannot be sold and transported as such, such ROM coal has therefore to be prepared.. Such preparation includes segregation of the coal from the stones, whereupon they are crushed/sized as per the desired requirement of the purchasers concerned in the mine area itself through deployment of workers and using pay loaders and dozers, then, the manufacturing coal becomes ready for sale. Now, the issue arises....
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.... effect from 24.03.2011, prior to which coal was subjected to zero excise duty (f) In addition, since inception, on the sale price of the coal including the said sizing charges, Value Added Tax ("VAT") and Central Sales Tax have been deposited as per the relevant statutes of the State and Central Governments respectively, by ICML (g) On 23.08 2012 a show cause notice was issued by the Commissioner requiring ICML to show cause as to why a sum of it under the Proviso to Section 73(1) of the Act, along with interest thereon under Section 75 of the Act and as to why penalties should not be imposed upon ICML under Sections 76, 77(2) and 78 of the Act, on the allegation that during the period from 2007-08 to 2011-12 ICML was engaged in providing the services of sizing of coal to its customers for which ICML recovered additional amount of money as consideration and since the said sizing of coal did not amount to "manufacture" within the meaning of Section 2(f) of the Central Excise Act, 1944 and Section Note I of Section V of the First Schedule to the Central Excise Tariff Act, 1985, the activity of sizing of coal was covered by the expression "production or processing of goods for or....
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....des 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 the time when the sizing of coal takes place, they continue to remain ICML's property and not that of either CESC or CPL. The sale of coal and consequently the title thereof passes on to CESC/CPL only at the delivery point specified in the respective agreements, which is after completion of sizing of the coal. There is therefore no production or processing of goods for and on behalf of any client or customer, as required under Section 65(19)(v) of the Act. 8. In terms of Section 65(19) of the Finance Act, 1994 any activity that amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act is excluded therefrom Section 2(....
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....se, Kolkata-1 Commissionerate/Principal Commissioner of Central Excise. Kolkata-1, 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 assessable value/transaction value that included the base price, sizing charges, washing charges and transportation charges, but had not paid central excise duty by not including cesses/fees, royalty and stowing excise duty, resulting in short payment of excise duty payable of amounts confirmed by the respective adjudication orders. Even for the periods pertaining to years 2015-16. 2016-17 and 2017-18 (upto June 30, 2017) the assessments under the Central Excise provisions have been finalised by the jurisdictional proper officer and differential central excise duty, as finally assessed, along with interest, were demanded and paid by ICML 9. It is also not dis....
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.... Northem 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 central excise authorities seek to levy duties under Central Excise Act, 1944 while respondent claims leviability under Finance Act, 1994. That the respondent had been discharging service tax liability on 'job work and had been paying VAT on the material component is not in doubt. The original authority has placed reliance on the decision of the Tribunal in Osnar Chemical Pvt. Ltd. V. Commissioner of Central Excise, Bangalore-II [2009 (240) ELT 115 (Tri-Bang.)] to hold that discharge of tax liability under one law precludes the invoking of another law merely for game ring revenue that has thereby escaped one of the jurisdictions.....
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....CESTAT, Kolkata, this Tribunal observed that the activity undertaken by the appellant, amounts to manufacture. In that circumstances, no service tax is payable by the appellant. 7.4 In view of this, we hold that as the activity undertaken by the appellant amounts of manufacture, therefore, no service tax is payable by the appellant under the category of "mining service". 7.5 We further take note of the fact that for the period 1st April, 2008 to 31st March, 2012, the appellant has paid VAT on the sale of sized coal to CESC/CPL. It is settled position that the levy of VAT and service tax is mutually exclusive and the appellant is paying excise duty from March, 2011 onwards and also clean energy cess since 2010, therefore, the service tax cannot be demanded. 7.6 We further take note of the fact that the activity of raising of coal amounts to manufacture as per Section 2 (f) of the Central Excise Act, 1944, therefore, the appellant is a manufacturer and have been discharging excise duty thereon since 2011 onwards. Therefore, it cannot be said that prior to March, 2011, the activity undertaken by the appellant does not amount of manufacture and is liable to pay service tax. As the a....
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....ppellant is not maintaining separate accounts of input/input services with regard to activity of extraction of coal and sale of solar power business, which is exempted from payment of excise duty, whether the appellant is liable to pay the amount equal to 6%/8% of the value of sale of solar power under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 or not ? 9.1 In fact, it is contention of the appellant that they have not availed the cenvat credit on common inputs, which are attracted dutiable as well as exempted activity. To that effect, the appellant has produced a Chartered Accountant's Certificate evidencing maintenance of separate accounts. In the circumstances, we hold that as the appellant is maintaining separate accounts of input, which has gone in manufacturing of dutiable as well as exempted goods, therefore, the demand under Rule 6(3)(i) of the Cenvat Credit Rules, 2004, is not maintainable. 9.2 We have seen that the appellant has produced a Certificate issued by the Chartered Accountant. 9.3 For better appreciation, the said Certificate is extracted herein below : It is evident that from the said Certificate issued by the Chartered Accountant certifying that the appe....