Customs, Excise and Gold Tribunal - Calcutta
Commissioner Of Central Excise And ... vs B.K. Thakkar on 24 October, 2007
Equivalent citations: [2008]13STJ238(CESTAT-KOLKATA), 2008[9]S.T.R.542, (2008)12VST424(CESTAT-KOL)
ORDER Chittaranjan Satapathy, Member (T)
1. Heard both sides at length.
2. The respondents entered into contracts dated 4.6.03 and 15.9.03 with M/s. S.A.I.L. for excavation, transportation and feeding of iron ores to the hill top crusher plant for further processing of iron ore. The Original Authority has confirmed the duty-demand against the respondents holding the activities undertaken by the respondents to be falling under the category of 'cargo handling service'. The lower Appellate Authority in her Order has, however, set aside the said Order-in-Original leading to the present appeal which has been filed by the Department. Learned J.C.D.R., Shri Vineet Ohri appearing for the Revenue strongly argues that the reference to the business auxiliary services brought under the tax net subsequently, and referred to by the lower Appellate Authority, is totally irrelevant to the issue and the taxability of the impugned activities of the respondents have to be determined with reference to the services which were under the tax net at the relevant time, i.e. during the period from 27.9.03 to 20.9.04. He, further, contends that the term, 'cargo' ordinarily means goods meant for transportation and hence the term, 'cargo handling services' would encompass all kinds of services related to handling of goods/articles for transportation including services like loading, unloading, packing and unpacking. He also argues that since the activities undertaken by the appellants involve loading and unloading of cargo, the same is required to be taxed under the category of 'cargo handling services'. He prays for setting aside the impugned Order-in-Appeal and restoring the Order-in-Original.
3. Shri Kartik Kurmy, learned Advocate appearing for the respondents takes us through the relevant contracts and states that the activities undertaken by the respondents are appropriately classified as 'mining service' which has been brought under the tax net only with effect from 1.6.2007 and hence, prior to that date, the activities undertaken by the respondents cannot be taxed. He also states that the contracts in question are composite in nature for excavation, transportation and feeding of iron ores. It is not a contract for loading or unloading or handling of cargo. According to him, the intention of the respondents and their clients were to excavate the iron ore and transport it to the crusher plant for crushing. He also refers to the provisions of Section 65A(2) of the Finance Act, 1994 and states that the said Section forbids vivisection of a composite contract and envisages that a composite contract shall be classified under any one category on the basis of its essential character. He also argues that the essential character of the composite services provided in this case is mining/production of iron ore. He also states that the service of transportation was brought under the tax net only with effect from 1.1.05 and hence, the activities undertaken by the respondents cannot also be taxed under the said category of services.
4. After hearing both sides and perusal of case records, we are of the view that the activities undertaken by the respondents under the impugned contracts primarily involves excavation and transportation of iron ore subsequent to blasting in the iron ore mines, and feeding of iron ores to the hill top crusher plant. The activities incidentally may involve some loading and unloading of iron ore while carrying out the principal activities under the contracts. Such incidental activities of loading and unloading undertaken by the respondents cannot give the entire contracted activities the character of cargo handling services. Further, as noted by us in our earlier Order in the case of ITW India Ltd. v. C.C.Ex. and Cus., Bhubaneswar 2007(8) STR 490, 'cargo handling service' means -
i) Loading, unloading, packing or unpacking of cargo, and includes -
ii) Cargo handling services provided for freight in special containers or for non-containerised freight,
iii) Services provided by a container freight terminal or any other freight terminal and
iv) Cargo handling service incidental to freight.
4.1. The coverage under 'cargo handling service' would extend ordinarily to what is commercially known as cargo carried as freight in a ship, airplane, rail or truck. As such, in our view, the activities undertaken by the respondents are primarily in the nature of mining activities comprising of excavation, transportation and feeding of iron ores to the crusher plant and even though these activities may incidentally involve some loading and unloading, the same cannot be covered under the category of 'cargo handling service' as what is carried cannot be commercially called 'cargo' in this case. Consequently, we are of the view that the gross amount received by the respondents from M/s. SAIL cannot be charged to Service Tax under the said heading of 'cargo handling services'. Hence, we uphold the impugned Order-in-Appeal, but for the different reasons recorded by us above, and we dismiss the Departmental Appeal. The Cross Objection filed by the respondents also stands disposed off.
Operative part of the Order was pronounced in the open court on 24.10.07.