Customs, Excise and Gold Tribunal - Calcutta
Sainik Mining And Allied Services Ltd. ... vs Commr. Of Central Excise, Customs And ... on 2 November, 2007
Equivalent citations: [2008]13STJ241(CESTAT-KOLKATA), 2008[9]S.T.R.531, [2008]12STT433, (2008)12VST454(CESTAT-KOL)
ORDER Chittaranjan Satapathy, Member (T)
1. As similar issues are involved, both the appeals are taken up together for hearing and disposal.
2. Heard both sides.
3. In the case of Service Tax Appeal No. 25/06, the appellants, M/s Sainik Mining & Allied Services Ltd. worked inside the mining area as per an agreement entered into with M/s Mahanadi Coalfields Ltd. The work performed by the appellants involved transportation of coal inside the colliery area and mechanical transfer of coal to Tippers at quarry face. The authorities below have held that the appellants have provided cargo handling services to M/s Mahanadi Coalfields Ltd. and hence have demanded service tax on the gross amount received by the appellants. It is the contention of the appellants that the work undertaken by them does not fall in the category of cargo handling services. They have also stated that M/s Mahanadi Coalfields Ltd. had examined the activities undertaken under the contract and had clarified to the appellants as well as to similar other contractors that the activities undertaken are not in the nature of cargo handling services.
3.1 In the case of Service Tax Appeal No. 29/06, the appellants, M/s G.G. Coal Transport (P) Ltd., had also entered into an agreement with M/s Mahanadi Coalfields Ltd. for executing works inside the mining area. In terms of the agreement, the appellants had to deploy specified number of machines and tipper trucks for transport of coal from various quarry beds/surface stocks/feeder breakers to surface stocks/feeder breakers/railway sidings. It is the contention of the appellants that the work undertaken does not come under the purview of cargo handing services as has been held by the authorities below. They have also contended that M/s Mahanadi Coalfields Ltd. had after examining all the activities undertaken had clarified to the appellants that the work involved under the contract does not fall under the cargo handling services.
4. We find that in both the cases, the lower appellate authority has held that the activities and operations undertaken by the appellants are covered under the definition of "Cargo Handling Agency", as such activities were not mere transportation of goods. She has accordingly held that the service tax is payable by both the appellants and has upheld the demands confirmed by the original authority.
5. We note that in our earlier Order dated 10.8.07 in the case of ITW India Ltd. v. Commr. of Central Excise and Customs, BBSR reported in 2007 (8) STR 490 (Tri.-Kol.), we had examined at length the scope of cargo handling service as well as the meaning of cargo. We find that in these two cases before us, both the appellants have executed work under a contract with M/s Mahanadi Coalfields Ltd, for movement of coal within mining area. The agreement entered into by the appellants with M/s Mahanadi Coalfields Ltd. reveals that the work performed by the appellants involved transportation of coal inside the colliery area and mechanical transfer of coal to Tippers at quarry face. The amount received by the appellants also includes the cost of operation of machinery involved in the mechanical transfer of coal. The appellants have challenged the duty demand on the ground that the mechanical transfer of coal to Tippers and transportation of coal within colliery/mining area on behalf of their principals do not amount to cargo handling. They have also contended that M/s Mahanadi Coalfields Ltd. (M/s MCL) is a Central Government Undertaking and it had after due examination clarified to them that the activities undertaken do not amount to cargo handing, nor M/s MCL has paid any service tax to the appellants. It is their contention that the entire area of operation constitutes mine as defined under the Mines Act and includes the area from the coal face to the railway siding, within which, the appellants have moved the coal. The appellants have also referred to the following clarification given by M/s MCL:
The work of coal Transportation Contact between yourself and MCL bearing LOI No. MCL/SBP/CGM(CMS)/96/424 dated 07.08.1996 constitutes 'mere transportation of cargo' and exempted from the definition of cargo handling service. You may please note that the foundation of valuation of your contract with MCL is firstly, the volume you transport and secondly the length/nature of the distance you are to cover; loading of coal onto your tipper and uploading of the same therefrom do not constitute any element of valuation. As a matter of fact mere transportation is a misnomer, loading and unloading incidental thereto is necessarily inevitable. Moreover, you load the coal onto your tipper either from coalface or from ground stock or from bunker or from CHP and upload the same at some similar point - this activity never involves loading onto or unloading from any ship/vessel/vehicle which conveys the coal from/to our own mining premises and therefore, the coal cannot stand in the same footing as that of 'cargo'. This is to bring to your notice that right from the coal face to Railway siding everything in between (inclusive both) constitute 'mine' as defined by the Mines Act. Something going out of mines by conveyance to end user or something coming into mines by conveyance from suppliers may constitute cargo but not something moved from place to place within the periphery of one mine. The first chargeable/taxable event in order to levy service tax on 'cargo handling service' is that the thing 'handled' must be 'cargo' - in the instant case the coal transported by you is not cargo, nor you handle 'cargo' as such but merely transport the same.
MCL does not receive from you any service that can be branded as cargo handling service and your request to release payment from our side on account of reimbursement of service tax allegedly paid/payable by you cannot be conceded to. This is however without prejudice to MCL's contractual right/liability regarding sharing tax burden as contained in the agreement referred to hereinabove.
6. As we had noted in the case of M/s ITW India Ltd. (cited supra), the cargo handling service under Section 65(21) of the Finance Act, 1994, 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.
7. We find that the activity undertaken by both the appellants for mechanical transfer of coal from the coal face to tippers and subsequent transportation of the coal within the mining area, does not come under the purview of cargo handing service. The dominant activities undertaken by the appellants under the contract in question are primarily the movement of coal within mining area and transfer of coal from the coal face to the tippers, if at all, includes loading and unloading, which are merely incidental. Cargo in commercial parlance has a definite connotation which is carried as freight in a ship, plane, rail or truck and the activities undertaken by the appellants in terms of the contracts on behalf of M/s MCL to move coal within mining area do not fall in the category of cargo handling service. Moreover, the activities undertaken are principally the transportation of coal within mining area and hence, the gross amounts received for the same cannot be taxed under the category of cargo handling service. We have, therefore, no hesitation in our mind to hold that the definition of cargo handling service under the Finance Act, 1994, does not include the kind of activities undertaken by the appellants and hence the same are not chargeable to service tax. We also find that there was no suppression or mis-statement by the appellants regarding the nature of activities undertaken by the appellants and hence the imposition of penalty on them is not at all justified. Accordingly, we set aside the impugned order and allow both the appeals with consequential benefit to the appellants.
(Operative part pronounced in the open Court on 2.11.07.)