Custom, Excise & Service Tax Tribunal
Shreem Coal Carriers (P) Ltd vs Commissioner Of Central Excise on 7 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.ST/116 & 117/08 (Arising out of Order-in-Original No.06/ST/2008/C dated 11/03/2008 passed by Commissioner of Central Excise, Nagpur) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Shreem Coal Carriers (P) Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Nagpur Appearance:
Shri.L.Badrinarayan, Advocate for appellant Shri.D.Nagvenkar, Addl.Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing : 12/08/2014 Date of Decision : /2004 ORDER NO Per: P.R.Chandrasekharan
1. The appeal arises from Order-in-Original No.06/ST/2008/C dated 11/03/2008 passed by Commissioner of Central Excise, Nagpur. Vide the impugned order, the adjudicating authority has confirmed a service tax demand of Rs.84,88,665/- along with interest thereon and also imposing penalties under Sections 76, 77 & 78 of the Finance Act, 1994 on the appellant, M/s.Shreem Coal Carrier (P) Ltd., by classifying the services rendered by them under Cargo Handling Services during the period 16/08/2002 to 31/03/2007. Aggrieved of the same, the appellant is before us.
2. The facts relevant to the case are as follows:
2.1 Acting on intelligence, the officers of the DGCEI, conducted investigation into the activities undertaken by the appellant, M/s.Shreem Coal Carrier (P) Ltd. for M/s.Western Coalfields Ltd., (WCL). Scrutiny of the work orders placed on the appellant by WCL revealed that the aforesaid work was for loading of coal from various quarries, faces, surfaces and stocks of WCL by deploying its own pay-loaders and transporting the same within the mine area. In order to undertake the said activities, the appellant was required to deploy tippers and other transport vehicles. They were also required to deploy pay-loaders at various coal mining sites for loading of coal into the tippers. The contracts provided for separate charges, one for loading of coal and another for transportation. As regards the transportation was concerned, WCL discharged the service tax liability under the category of GTA services, whereas on the loading activity no service tax liability was discharged. The appellant also did not obtain any service tax registration and during the period 16/08/2002 to 31/03/2007 the appellant undertook loading of 98, 40, 392.28 MTs of coal and received loading charges amounting to Rs.8,28,70,819.64. The department was of the view that the activity of loading of coal into the tippers would come within the purview of Cargo Handling Service as defined in Section 65 (23) read with Section 65 (105) (zr) of the Finance Act, 1994. Accordingly, a show-cause notice dated 19/10/2007 was issued demanding service tax of Rs.84,88,665/- for the period 16/08/2002 to 31/03/2007 along with interest thereon and also proposing penal action. The said notice was adjudicated by the impugned order wherein the duty demands were confirmed along with interest and penalties were imposed.
3. The learned Counsel for the appellant submits that the work involved was a composite one, namely, hiring of pay-loaders and tippers and loading of coal into tippers and the transportation from pit-heads to crushing sites and unloading at the crushing sites. The loading of coal into the tippers was incidental to the transportation of coal from the pit-heads to the crushing sites where the coal was further processed. Since the activity undertaken is a composite one and the main activity is transportation, there cannot be any separate demand for service tax under Cargo Handling Service. It is also his contention that during the period from 2002 to 2005, transportation of coal was not a taxable activity and therefore, no liability would accrue on handling of coal by the appellants. For the period subsequent to 2005, WCL had discharged the service tax liability on the consideration paid for transportation under GTA service and therefore, there cannot be any service tax demand on the appellant on loading/unloading of coal. The learned Counsel places reliance on the decision of this Tribunal in the case of Sainik Mining & Allied Services Ltd. Vs. CCE&ST BBSR 2008 (9) STR 531 (Tri-Kolkata) wherein it was held that deployment of machines and tipper trucks for transport of coal from quarry beds, surface stocks to railway sidings cannot be considered as Cargo Handling Service since the movement of coal within mine area is the dominant activity and the loading and unloading are merely incidental. The learned Counsel also places reliance on the decision of this Tribunal in the case of CCE, Ranchi Vs. Modi Construction Co. - 2012 (12) STR 34 (Tri-Kolkata) wherein it was held that the service of shifting/transportation of raw materials, waste materials and finished products from one place to another inside the factory does not call for taxation under the head Cargo Handling Service. The said decision of the Tribunal was also upheld by the Honble High Court of Jharkhand in the same case reported in 2011 (23) STR 6 (Jhar.). The learned Counsel also placed reliance on the decision of the Tribunal in the case of Anupama Coal Carriers Pvt. Ltd., Vs. CCE, Raipur 2013 (32) STR 41 (Tri-Del) wherein it was held that movement of coal from mine surface to pit-heads within the mine area by deploying pay-loaders would not amount to Cargo Handling Service. The learned Counsel also submits that the demand is time barred inasmuch as the activities of the appellants were known to the department and there was a confusion about the scope of the entry relating to Cargo Handling Service at the relevant time and therefore, extended period of time could not have been invoked for confirmation of duty demand and they places reliance on the decision of this Tribunal in the case of Niranjan Lal Agarwal Vs. CCE 2012 (26) STR 457 (Tri-Del). The reliance is also placed on the decision of this Tribunal in the case of Singh Transporters Vs. CCE 2012 (27) STR 488 (Tri-Del) in support of the contention that extended period of time could not be invoked when there was confusion regarding the scope of Cargo Handling Service. In view of the above, it is pleaded that the impugned demands be set aside and the appeals allowed.
4. The learned Additional Commissioner (AR) appearing for the Revenue on the other hand contends that the work orders placed on the appellant envisaged two activities to be undertaken by the appellants. One activity is loading of coal into the tippers and the consideration was paid per MT of coal loaded. Another activity is transportation of coal from pit-heads to the stockyards/crusher site in the mine area for which another rate has been prescribed. On this part of the consideration WCL has discharged the liability. However, the present demand is confined to the activity of loading undertaken by the appellant and the demand is restricted to charges collected for loading alone. Since the loading of coal amounts to Cargo Handling Service as defined in law, the present demands are sustainable. Inasmuch as the appellant has not obtained the registration and the activities were not brought to the notice of the department, the invocation of extended period of time is justified. He places reliance on the recent decision of this Tribunal in the case of Kartikay Bulk Movers Pvt. Ltd. vide final order NO.A/2326/13/CEST/C-I dated 20/11/2013 wherein on identical set of facts, this Tribunal held that the subject activity of loading of coal into tippers would come within the purview of Cargo Handling Service and the invocation of extended period of time was also justified. While coming to the said conclusion this Tribunal relied on the decision of the Honble Orissa High Court in the case of Coal Carriers Vs. CCE, Bhubaneshwar 2011 (24) STR 395 (Ori.) where in a similar situation, the activity undertaken was held to be falling within Cargo Handling Service. The learned AR also relies on the decision of this Tribunal in the case of Gangadhar Bulk Movers Pvt. Ltd. Vs. CCE 2012 (27) STR 258 (Tri-Mumbai) wherein also loading and unloading of coal by a contractor for WCL, was held to fall within Cargo Handling Service and liable to service tax accordingly. The learned AR also points out in the case of CCE, Raipur Vs. Gayatri Carriers Pvt. Ltd. 2013 (32) STR 367 (Tri-Del) this Tribunal following the ratio in the Gangadhar Bulk Movers Pvt. Ltd. case (supra) held that the activity of loading/unloading of coal qualifies to be classified under Cargo Handling Service. Accordingly, it is pleaded that the impugned order is sustainable in law and the demands merit to be upheld.
5. We have carefully considered the submissions made by both the sides.
5.1 Section 65 (23) of the Finance Act, 1994 defines the Cargo Handling Service as under:
Cargo handling service means loading, unloading, packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling service incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods.
5.2 From the above definition, it can be seen that loading, unloading, packing or unpacking of cargo falls within the Cargo Handling Service. The next question is whether the coal at pit-head is a cargo or not. The statute does not define what cargo is; therefore, the dictionary meaning of the term has to be taken for deciding what cargo is. According to the Blacksmith dictionary, the term cargo means, the load (that is freight) of a vessel, train, truck, aeroplane or other carrier. Thus any goods which are meant for transportation from one place to another by any mode of transport could be considered as cargo. Therefore, the mined coal at pit-heads required to be transported to stockyards or crushing sites from the mine area can be certainly considered as cargo. Therefore, the activity undertaken by the appellant clearly falls within the definition of Cargo Handling Service as defined in law. This issue was examined at great length in the case of Gangadhar Bulk Movers Pvt. Ltd. case (supra) wherein also the issue related to classification of service in respect of loading of coal on tippers by hiring pay-loaders and transporting from one place to another within the mining area. After considering the various decisions including those involved in the Modi Construction Co. and Sainik Mining & Allied Services Ltd. (supra), this Tribunal came to the conclusion that the said activity would fall within the purview of Cargo Handling Service and leviable to service tax accordingly. However, the Tribunal in the said case held that as there was a confusion as regards the taxability of the activity, the demand should be restricted to the normal period of limitation and extended period of time could not be invoked. The same ratio was followed by this Tribunal in the case of Gayatri Carriers Pvt. Ltd. wherein also the question for consideration was handling of coal in the mining area belonging to South Eastern Coal Ltd. prior to 01/06/2001. Following the ratio in Gangadhar Bulk Movers Pvt. Ltd. case (supra) this Tribunal again took the view that the activity of loading and unloading of coal in the mining area would come within the purview of Cargo Handling Service. The Honble High Court of Orissa in the case of Coal Carriers (supra) held that loading of coal into the railway wagons would fall within the definition of Cargo Handling Service. The Honble High Court also observed that as per the dictionary meaning the goods which are being carried or transported by any means of transportation and has become load of the trucks would also come within the meaning of cargo and therefore, the activity was squarely covered by Cargo Handling Service as defined in law. In this view of the matter, we are of the view that the activity undertaken by the appellant squarely falls within the scope of Cargo Handling Service as defined in law.
5.3 In respect of one of the contracts, we notice that the same relates to mining of sand from the riverbed and transporting the same to the Western Coalfields mining area. Sand is a minor mineral and therefore, mining of sand from riverbed come within the definition of mining service and will not comes within the scope of Cargo Handing Service as the main activities is of mining and therefore, demand of service tax on mining of sand is not sustainable in law.
5.4 As regards the invocation of extended period for confirmation of demand, we notice that there was a lot of confusion regarding the scope of Cargo Handing Service and there were conflicting decisions by the Tribunal and others in this regard. Therefore, the appellant could have entertained a bonafide belief that the activity undertaken by him would not come within the purview of service tax liability. Therefore, the invocation of extended period of time and imposition of penalties on the appellant are not clearly justified in the facts of the case.
5.5 In view of the factual and legal matrix as discussed above, we hold that the activity of loading/unloading of coal by engaging tippers would come within the purview of the Cargo Handling Service and the appellant would be liable to discharge service tax liability accordingly. As regards the mining of sand from the riverbed the said activity would come within the scope of mining service and not under Cargo Handling Service. Since there was a confusion about the scope of levy, the extended period of time is not invocable in the present case and accordingly, the demand should be restricted to the normal period of limitation. The appellant would be liable to pay interest on the service tax demand payable for the normal period of limitation. Since the dispute relates to the classification of service, imposition of penalties are not warranted. Therefore, the matter is remanded to the adjudicating authority only for the limited purpose of quantification of the service tax demand for the normal period of limitation and for excluding the sand mining activity undertaken from the scope of Cargo Handling Service. The appeal is disposed of in the above terms.
(Pronounced in Court on ) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 11