ORDER
T.K. Jayaraman, Member (T)
1. In terms of Order-in-Original No. 05/2006 (Ser. Tax) dated 05.12.2006 passed by the Commissioner of Customs & Central Excise, Tirupathi, the appellants are required to deposit the following amounts:
1. Service Tax of Rs. 1,54,59,964/-
2. Education Cess of Rs. 3,09,199/-
3. Interest of the above amount
4. Penalty at the rate of Rs. 100/- under Section 76 of the Finance Act 1994
5. Penalty of Rs. 1000/- under Section 77 of the Act
6. Penalty of Rs. 1,57,69,163/- under Section 78 of the Act
2. Sri Jai Kumar, Learned Advocate appeared for the appellants and Sri. K.S. Reddy learned JDR for the Revenue.
3. The learned advocate submitted that service tax has been demanded under the category of “site formation and clearance, excavation and earthmoving and demolition services”. But the services rendered by the appellant would not come under the above category. The appellant has been awarded with the work of mining Barytes Ore from the depth ranging from 40 to 100 mtrs. from the surface by APMDCL. The APMDCL is holding Mangampet Barytes Project located at Mangampet, Kadapa District. The leasehold of the Corporation is 162.5 Hec at Mangampet with an estimated reserves of 74 Million Tonnes of Barytes Ore, of which about 10 Million Tonnes has already been excavated. The above facts, clearly shown that M/s RKR (the appellant) is not attending to any work relating to Site Formation, which may make the 162.5 hec. of land suitable for the purpose of mining.
4. Moreover, only in 2007 “mining services” have been brought under the service tax net. It was contended that service tax cannot be levied for a period prior to the inclusion of the particular service in the service tax net. Reliance was placed on the decision of CESTAT in Chennai Telephones (BSNL) v. Commissioner of Central Excise, Chennai 2006 (3) S.T.R. 227 (Tri. Chennai). He also argued that there is no justification for imposing the various penalties.
5. The Revenue filed their cross objections. It was stated that the appellants had undertaken the work of excavation and removal of over burden and Barytes ore, loading, transportation, unloading and leveling at APMDCL Management Barytes Mangampet village Kadapa. “Site formation and clearance, excavation and earthmoving and demolition services” was defined under Clause 97(a) of Section 65 of Finance Act, 1994 as:
(i) Drilling, boring and core extraction service for construction, geophysical, geological or similar purposes; or
(ii) Soil Stabilization; or
(iii) Horizontal drilling for the passage of cables or drain pipes; or
(iv) Land reclamation work; or
(v) Contaminated top soil stripping work; or
(vi) Demolition and wrecking of building, structure or road, but does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies.
6. In view of the above definition, it is clear that the geological, geophysical activities excavation overburden removal, drilling at site etc are covered under site formation and clearance, excavation (emphasis added) and earthmoving and demolition services and the same is w.e.f 16.6.2005. Reliance was placed on CBEC’s clarification dated 27.07.2005 which clarified that the definition of “site formation and clearance excavation and earthmoving” is an inclusive definition and the activities specially mentioned are indicative and not exhaustive.
7. We have gone through the records of the case carefully. The appellant’s contention is that the services rendered by them would come within the category of “mining services” which came into the taxing net only in the year 2007. The revenue strongly contents that the excavation and removal of overburden and ore would squarely fall within the definition of the services of “site formation and clearance excavation and earthmoving and demolition service.” At this stage it would be very difficult for us to hold that the services rendered by the appellant would not come within the “site formation and clearance excavation and earthmoving and demolition services.” The appellant’s contention that they had undertaken only mining services has to be examined with reference to the contract entered by them with APMDCL and decision has to be arrived at. All the documents are not available in the file to take a considered decision. In these circumstances, we cannot say that the appellant have “prima facie” a strong case on merits. Therefore, we order the appellants to pre-deposit a sum of Rs. 30,00000/- (Rupees Thirty Lakhs only) within a period of 4 months. On deposit of the above-mentioned amount the balance of service tax, interest and penalties will be waived. Further recovery is stayed till the disposal of the appeal. As the amount involved is very high the case is listed for hearing on 24.12.2007.
(Pronounced in open Court on 20.08.2007)
