Karnataka State Forest Industries ... vs Commissioner Of Central Excise, ...

ST/25131/2013-DB, ST/26912/2013-DB, ST/1551/2012-DB, ST/25502/2013-DB

[Arising out of Order-in-Appeal No. 494/2012 dated 01/10/2012 passed by Commissioner of Central Excise, Mysore] [Arising out of Order-in-Appeal No. 68/2013 dated 12/03/2013 passed by the Commissioner of Central Excise, Mysore] [Arising out of Order-in-Appeal No. 140/2012 dated 08/03/2012 passed by the Commissioner of Central Excise, Mangalore] [Arising out of Order-in-Appeal No. 632/2012 dated 14/11/2012 passed by the Commissioner of Central Excise, Mangalore]

For approval and signature:

HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE MR. ASHOK KUMAR ARYA, TECHNICAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

Karnataka State Forest Industries Corporation Ltd. No.47/A, Kuvempunagar, Mysore - 570 023 Appellant(s) Versus

Commissioner of Central Excise, Customs and Service Tax, Mysore S1-S2, Vinaya Marga, Siddhartha Nagar, Mysore  570 011 Karnataka Respondent(s)

Appearance:

Mr. A.S. Monnappa, Advocate No.128, III Stage, Vinayaka Layout, Vijayanagar, Bangalore For the Appellant

Mr. N. Jagdish, DR For the Respondent

Date of Hearing: 04/09/2015 Date of Decision: 04/09/2015 CORAM:

HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE MR. ASHOK KUMAR ARYA, TECHNICAL MEMBER

Final Order Nos. 21841-21844 / 2015

Per: ARCHANA WADHWA

All the appeals are being disposed of by a common order as the issue involved is identical. The appellant is a public sector undertaking of Government of Karnataka. They are required to undertake cutting of trees, converting them into logs as also into poles and fire wood etc. for and on behalf of the Government of Karnataka, Forest Department. The Revenue by entertaining a view that such activities amount to providing services falling under the category of Business Auxiliary Service, raised demands against them, by invoking the longer period of limitation. The said demands stand confirmed by the lower authorities by way of separate orders.

2. Learned advocate appearing for the appellant fairly agrees that in terms of the Tribunals decision in the case of Lakshmappa & others, vide Final Order Nos. 21720 - 21748/2015 dated 30.07.2015 the activity of felling of trees, converting them into logs and other types of woods has been held to be falling under the category of Business Auxiliary Service. He further submits that in terms of the said order of the Tribunal, matter was remanded back to the original adjudicating authority for deciding the issue as to whether such activities would amount to manufacture or not. If the same amounts to manufacture and attract duty of excise, the same cannot be held to be production or processing of goods on behalf of others, attracting service tax liability. He further submits that the said issue was raised before the adjudicating authority by the appellants but he has dismissed the same on the short ground that the Honble Karnataka High Court in the case of CCE, Bangalore-I Vs. Y. Moideen Kunhi & Co. reported as [2004 (163) E.L.T. 299 (Kar.)] has held that production of timber does not amount to manufacture. The appellants grievance is that they are not only undertaking the activity of sawing but the entire activity of felling of trees and converting them into log wood and fire wood etc. which would get covered by the manufacturing definition and falling under Chapter 44.01 to 44.04. The adjudicating authority has not examined the said tariff heading and has simply rejected the appellants plea of manufacture. He submits that the matter needs to go back for looking into the said dispute.

3. He further submits that as per the decision of Honble Supreme Court in the case of T.N. Godavarman Thirumulkpad Vs. Union of India AIR 1997 SC 1228, felling of trees in any forest or any clearance of forest land in execution of projects shall be in strict conformity with the Forest Conservation Act, 1980 and any other laws applying thereto. Moreover, any trees so felled, and the disposal of such trees shall be done exclusively by the State Forest Corporation and no private agency is to be involved in any aspect thereof. As such he submits that it is a sovereign function of the appellant to undertake such felling of trees for the sake of Government in which case it cannot be held to be a service provided by them. However he fairly agrees that the said issue was not raised before the original adjudicating authority and prays for grant of another opportunity to contest the demand on the said ground.

4. Learned advocate also contest the impugned order on the ground of limitation.

5. Inasmuch as the main issue stands decided by us in the above referred decision being Final Order Nos. 21720 - 21748/2015 dated 30.07.2015 and there are certain other issues which have not been either raised by the appellant or not considered by the adjudicating authority in proper perspective, we deem it fit to set aside the impugned orders and remand the matter to the original adjudicating authority for fresh decision in the light of the observations made by us as above. The plea of limitation would also be reconsidered by the original adjudicating authority in the light of our earlier order. All the appeals are allowed by way of remand.

(Order pronounced in open court)

(ASHOK KUMAR ARYA) TECHNICAL MEMBER (ARCHANA WADHWA) JUDICIAL MEMBER

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