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

Design and engineering services may be taxable as services rather than subsumed into excisable goods' value.
Whether charges for design, engineering and consultancy are includible in excisable goods' value or taxable separately as services hinges on the factual nature of the supply, contractual allocation, and applicable valuation rules; board guidance treats many design activities as taxable services and the Determination of Price of Excisable Goods rules govern inclusion in excisable value, while prior case law predating the service tax regime has limited bearing.