Popular Constructions Vs Commissioner of Central Excise (CESTAT Bangalore)
The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise and Customs, Belgaum, which had classified the appellant’s activity of screening and grading iron ore as “Business Auxiliary Service” (BAS) and confirmed service tax demand along with penalties under Sections 77 and 78 of the Finance Act, 1994. The Department alleged that the activity amounted to processing of ore essential for marketing the extracted ore and was therefore taxable under BAS.
The appellant contended that it was engaged in mining-related operations and that screening and grading of iron ore formed part of mining activities. It argued that with effect from 01.06.2007, a separate taxable category, namely “Mining Services,” was introduced under Section 65(105)(zzzy), covering services provided in relation to mining of minerals, oil, or gas. Since the term “mining” was not defined in the Finance Act, the appellant relied on definitions contained in the Mines Act, 1952 and the Mines and Minerals (Development and Regulation) Act, 1957 (MMDRA), under which screening and grading of iron ore formed part of mining operations.
The appellant further relied on CBEC Circular No. 334/1/2007-TRU dated 28.02.2007, which explained the scope of the newly introduced mining service category. The circular clarified that services such as excavation, drilling, deployment of workers and machinery for extraction, breaking of rocks, sieving, grading, and similar outsourced mining-related activities were comprehensively covered under “Mining Services.” The appellant argued that the introduction of a separate mining service category indicated that such activities were not intended to be taxed under earlier service categories.
