Western Coalfields Limited Vs Commissioner of Central Excise (CESTAT Mumbai)
CESTAT Mumbai allowed three appeals filed by Western Coalfields Limited for the period April 2016 to June 2017 and set aside orders confirming duty demands of Rs.79,19,098/-, Rs.10,70,840/- and Rs.5,91,129/- under Section 73(1A) of the Finance Act, along with interest and penalties under Sections 75 and 77 of the Finance Act, 1994.
The appellant is engaged in production and clearance of coal and has several area offices with local Service Tax Registration. DGCEI intelligence indicated that the appellant was charging and collecting compensation, penalty and forfeiting Security Deposit/Earnest Money Deposit for short lifting of coal and breach of fuel supply agreement conditions. This activity was treated as a declared service under Section 66E(e) of the Finance Act, 1994.
The appellant submitted that it had already obtained relief from CESTAT Mumbai on the same issue for the earlier period July 2012 to March 2016. It also produced the Tribunal’s order dated 12.08.2022 and CBIC Circular No. 214/1/2023-Service Tax dated 28.02.2023, which recorded that the Board had decided not to file an appeal against the relevant CESTAT orders.
The Tribunal noted its earlier decision in the appellant’s own case, which had followed the decision of the Principal Bench in South Eastern Coalfields Ltd. Vs. Commissioner of Central Excise & Service Tax, Raipur, reported in 2021 (55) GSTL 549 (Tri.-Del.). Considering the earlier decision and its acceptance by the CBIC Board, the Tribunal allowed all three appeals and set aside the impugned orders with consequential relief, if any.
Service Tax Demand on Coal-Related Compensation
Western Coalfields Limited is engaged in the production and clearance of coal falling under Tariff Item No. 27011200 of the First Schedule of the Central Excise Tariff Act, 1985.
According to the DGCEI intelligence referred to in the order, the appellant was charging and collecting amounts described as compensation or penalty from buyers for short lifting of coal. It was also forfeiting Security Deposit and Earnest Money Deposit for breaches of the terms and conditions of fuel supply agreements.
The activity was equated with the provision specified in Section 66E(e) of the Finance Act, 1994, concerning agreeing to the obligation to refrain from an act, tolerate an act or a situation, or do an act.
Earlier Decision in Appellant’s Own Case
The Tribunal noted that the appellant had already succeeded in an appeal concerning the same issue for the earlier period from July 2012 to March 2016.
The appellant produced a copy of the Tribunal’s order dated 12.08.2022 along with CBIC Circular No. 214/1/2023-Service Tax dated 28.02.2023. The order records that, at paragraph 5 of the Circular, the CBIC Board had categorically noted its decision not to file an appeal against the CESTAT orders dated 12.08.2022 and 20.09.2022 concerning the same issue.
Tribunal Follows Earlier Judicial Precedent
The Tribunal examined its order dated 12.08.2022 in respect of the present appellant. It noted that the earlier order had followed the decision of the Principal Bench of the Tribunal at Delhi in South Eastern Coalfields Ltd. Vs. Commissioner of Central Excise & Service Tax, Raipur, reported in 2021 (55) GSTL 549 (Tri.-Del.).
The Tribunal considered the earlier order in the appellant’s own case, together with the judicial precedent followed therein and the fact that the decision had been accepted by the CBIC Board.
Final Decision
CESTAT Mumbai allowed all three appeals filed by Western Coalfields Limited for the period between April 2016 and June 2017.
The Tribunal set aside the orders passed by the Commissioner of CGST, Central Excise & Customs (Appeals), Nagpur, namely:
- Order-in-Appeal No. NGP/EXCUS/000/APPL/138/19-20/665 dated 02.12.2019;
- Order-in-Appeal No. NGP/EXCUS/000/APPL/78/2020-21/356 dated 05.11.2020; and
- Order-in-Appeal No. SD/257/ST/NGP/2021-22/774 dated 20.10.2021.
The appeals were allowed with consequential relief, if any.
Cases Discussed
- South Eastern Coalfields Ltd. Vs. Commissioner of Central Excise & Service Tax, Raipur – 2021 (55) GSTL 549 (Tri.-Del.).
FULL TEXT OF THE CESTAT MUMBAI ORDER
Legality of the orders passed in respect of three units of the Appellant by the Commissioner of CGST, Central Excise & Customs (Appeals), Nagpur holding confirmation of duty demand of Rs.79,19,098/-, Rs.10,70,840/- and Rs.5,91,129/- for the period between April, 2016 and June, 2017 under Section 73 (1A) of the Finance Act alongwith interest and penalty under Section 75 & 77 of the Finance Act, 1994 respectively as legal is assailed in these three appeals.
2. Facts of the Appellant’s case, in a nutshell, is that Appellant, having several area offices with local Service Tax Registration, is engaged in production and clearance of coal falling under Tariff Item No. 27011200 of the First Schedule of the Central Excise Tariff Act, 1985. Intelligence gathered by the DGCEI indicated that Appellant was charging and collecting amount in the name of compensation, penalty etc. for short lifting of coal from the buyers and forfeiting their Security Deposit (SD)/ Earnest Money Deposit (EMD) for breaching terms and conditions of the fuel supply agreement, which activity was equated with the provision specified in Section 66E(e) of the Finance Act, 1994 that makes it dutiable for agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act, since the same is considered as declare service. Appellant was put to show-cause, contested the same unsuccessfully at the first adjudication stage and also at the first Appellate forum. Now it is before the Tribunal for necessary relief.
3. We have heard submissions from both the sides an d perused the case record. As could be noticed Appellant had succeeded to get relief in an appeal filed by it on the same issue but for the prior period between July, 2012 and March, 2016. In filing copy of the order passed by this Tribunal on dated 12.08.2022 in respect of the present Appellant alongwith copy of the Circular No. 214/1/2023- Service Tax dated 28.02.2023, in which at para 5 of the CBIC Board it has been categorically noted that Board has decided not to file appeal against the order of CESTAT passed on 12.08. 2022 and on 20.09.2022 on the same issue.
4. We have gone through the order passed by this Tribunal specifically on dated 12.08.2022 in respect of the present Appellant and it is noticed that by following the decision of the Principle Bench of this Tribunal at Delhi in the case of M/s. South Eastern Coalfields Ltd. Vs. Commissioner of Central Excise & Service T ax, Raipur reported in 2021 (55) GSTL 549 (Tri.- Del.), this order dated 12.08.2022 is passed by CESTAT, Mumbai in the Appellant’s own case. This being the facts, record and judicial precedent set by this Tribunal that has been accepted by the CBIC Board, the following order is passed.
THE ORDER
5. All these three appeals of Appellant for the period between April, 2016 and June, 2017 are allowed and the orders passed by the Commissioner of CGST, Central Excise & Customs (App eals), Nagpur vide Order-in-Appeal Nos. NGP/EXCUS/000/APPL/138/19-20/ 665 dated 02.12.2019, NGP/EXCUS/000/APPL/78/ 2020-21/35 6 dated 05.11.2020 and SD/257/ST/NGP/2021-22/774 dated 20.1 0.2021 respectively are hereby set aside with consequential relief, if any.
(Operative portion of the order pronounced in open court)
