Assessment of Central Excise for a Manufactured Good

[Prasad Kudva]

Dear Sir,

In my Query to You, I am executing an Project for manufacturing of a Product with following Terms:

1. X % against NRE Charges (Design, Engineering, Services & Consultancy)

2. X %against Delivery

Against the Pt No 1, I have Paid VAT as the same is a Part of Designing of the Equipment thereby facilitating to its Production.

However, the Customer calls it as a service. Let me know if the Service Tax is Liable to be Paid or it comes under the ambit of Central Excise Act 1944 where it clearly indicates that Design and Engineering activity relating to the Production of the Equipment calls for Excise Payment...

Look forward to your reply.

Regards,

Prasad.

AI Summary

Debate Over Service Tax vs. Excise Duty on NRE Charges in Manufacturing: 2007 Circular vs. 1991 Precedent A discussion on whether service tax or excise duty applies to non-recurring engineering (NRE) charges for a manufacturing project. The querist paid VAT on design and engineering, considering them part of production, but the customer claims service tax is due. The respondent cites a 2007 circular clarifying design services subject to service tax. The querist refers to a 1991 Madras High Court decision and the Central Excise Act, 1944, arguing design and engineering are part of the sale value, not consultancy. The respondent highlights that service tax laws postdate the 1991 judgment and emphasizes the need for a detailed review of documents.