JUDGMENT

B.P. Dharmadhikari, J. (Oral) - Heard Learned Counsel for the respective parties.

2. All these appeals are already admitted for final hearing on some what identical question of law.

3. After hearing respective Counsel, as we find that same Bench of Central Excise and Service Tax Appellate Tribunal (hereinafter referred to as "the CESTAT" for short), has taken two contrary views and necessary application of mind is lacking, matters need to be remanded. We therefore, find it sufficient to reproduce the question of law as formulated in Central Excise Appeal No. 11/2014 on 23-7-2015, for the purpose of present discussion. The question reads as under :

"Whether the penalty under Section 77 of the Finance Act, 1994 could have been imposed when the Government of India, Ministry of Finance had a doubt till the issuance of Circular, dated 29-10-2006 whether service tax was leviable on the services of site formation?

4. In Central Excise Appeal No. 11/2014, the department is before this Court assailing the view in favour of assessee taken by the CESTAT. In Appeal Nos. 15/2014, 13/2014 and 09/2014, the respective Assessee are before this Court. The Assessees challenge the other view taken by the [CESTAT].

5. After hearing the respective Counsel, we find that existence of contract between the Assessee and WCL for excavation and removal [of] overburden is not in dispute. Question, however, was about nature of that contract. If it is held to be a ''mining'' contract, the Assessee would not have been required to pay the service tax for period prior to 1-6-2007. If it is held to be a contract for "site formation", the Assessee can be reached by the department. CESTAT, in all matters find contract to be for site formation.

6. The Assessees are not disputing this finding. Their submission is, the Assessing Officer-in-order-in-original has additionally called upon them to pay interest and penalty. These levies were also questioned in appeal before the CESTAT. The CESTAT has not recorded any finding on said challenges raised by the Assessee.

7. Today it is not in dispute that the Assessees'' have also accepted the interest factor and hence, consideration now is limited only to penalty. Contention of respective Assessee is, as there was a bona fide dispute in relation to nature of activity, the Assessee''s cannot be held at fault and therefore, the penalty cannot be demanded. They also claim that in contract reached with WCL, there was no provision casting burden upon the Assessees'' to pay service tax. This extra burden therefore, was the bone of contention between the contractors like the Assessee and employer WCL. WCL was seeking guidance from Ministry and necessary clarification has been issued for the first time on 12-11-2007. The Assessee therefore, contend that on 12-11-2007 the position was not clear and hence, charging penalty upon them is unjust. Additionally, it is pointed out that this challenge ought to have been looked into by the CESTAT first, and CESTAT has totally overlooked it.

8. In Appeal No. 11/2014, the CESTAT has upheld penalty and relevant observations therein are contained in paragraph Nos. 7 and 8. Learned Counsel for the Department has challenged the findings recorded therein as an indication of non-application of mind. They also add that if the clarification issued on 12-11-2007 has any relevance, its impact is not dealt with even in this order.

9. In order dated 3-10-2013, passed in Appeal Nos. ST/98/2008 and ST/165/2008 R.S. Earth Movers Pvt. Ltd. v. Commissioner[2016 (46) S.T.R. 544 (Tri. - Mum.)] assailed in Central Excise Appeal No. 11/2015, consideration by CESTAT in paragraph No. 7 shows mention of Section 76 or 77 or Section 78 of the Finance Act and CESTAT has found that notwithstanding anything in these sections, because of Section 80, if the Assessee can prove that there was a reasonable cause for his failure, the penalty need not be imposed. However, except for mentioning this provision, data about r