Quantum of duty on goods

[THYAGARAJAN KALYANASUNDARAM]

“A”, a manufacturer and a registered assessee under central excise, provides the manufactured good to “B” along with erection and commissioning of the said good. B issues a Purchase order as composite contract i.e. supply as well as erection to A for this. Now, A is not able to bifurcate the Value provided in the purchase order toward goods and services, where value of service and goods cannot be independently identified .How valuation should be done in this case to pay excise duty and service tax?

AI Summary

Manufacturer Struggles with Composite Contract Tax Calculation; Rule 2A and Service Tax at 14% on 40% Suggested A manufacturer, registered under central excise, faces difficulty in separating the value of goods and services in a composite contract with a client. The issue concerns how to calculate excise duty and service tax when the values cannot be independently identified. One response suggests using Rule 2A to vivisect the contract or paying service tax at 14% on 40% of the gross value under Works Contract Services. Another response concurs, emphasizing the need to consider the nature of the service provider for reverse charge applicability.