TaxTMI 
TaxTMI 
2007 (10) TMI 136
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.... key basis and relying on the decision of the Tribunal in the M/s. Daelim Industrial Co. Ltd. v. CCE - 2006 (3) S.T.R. 124 (Tribunal) = 2003 (155) E.L.T. 457 (Tri.-Del.), he concluded that the activity of the appellants would not fall under the category of 'Consulting Engineering Service'. Therefore, he dropped major part of the demand and confirmed only an amount of Rs.1,38,506/-. The Commissioner after going through the order of the Original Authority took up the same in exercise of the revision powers conferred on him in the Finance Act, 1994. After giving a personal hearing, the Commissioner came to the conclusion that the activities of the appellants would indeed fall under the category of 'Consulting Engineering Service' and therefore, he demanded an amount of Rs87,54,485/- for the I period 1997-2002 under Section 73 read with Section 68 of the Finance Act, 1994. Further, he demanded appropriate interest under Section 75 of the Finance Act. He imposed penalty of Rs.100/- per day in terms of Section 76 of the Finance Act. He imposed the equal penalty of Rs. 87,54,485/- in terms of Section 78 of the Finance Act, 1994. The appellants are highly aggrieved over the impugned order.....
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.....L.T. 457 (Tri.-Delhi) and also the case of M/s. Larsen & Toubro Ltd. v. CCE, Cochin -2006 (3) S.T.R. 223 (T)=2004 (174) E.L.T. 322. It was urged that the Daelim case was upheld by the Hon'ble Supreme Court and there was no reason why it should not be followed in the present case. Further, it was urged by the learned Consultant that the show cause notice has invoked the longer period and there is no discussion regarding the reasons for invoking the longer period in the Order- in-Revision. Moreover, in the course of hearing, it was pointed out that works contract came into the Service tax net only with effect from 2007 and therefore, during the relevant period the works contract were not liable for Service Tax. This ground has also been taken by the learned Consultant during the course of the hearing. As regards, the various invoices which mentioned payment for de sign, engineering, erection, commissioning etc., it was urged that in a works con tract, the contracted amount is for the supply of the entire works and the various payments made are known as the milestone payments. That is only for the proper management of the contract and for ensuring proper fund flow. It does not mean t....
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....w. (29) It is observed that those above contracts are for design, detailed engineering, procurements supply, fabrication, transportations erection, testing and 0 of air separation plant for Nitrogen. These con tracts are of composite contract. They received the entire work order from their clients starting from procurement and supply of materials to under taking testing, installation and commissioning. The allegation in the show cause notice that the design drawings and detailed engineering's, should equally fall under the category of consulting engineering service, does not stand scrutiny in as-much-as the drawings, designing, etc., has to be under taken by the assessee for their own purpose for fulfilling the contractual agreement of manufacture, supply of either air separation plant or nitrogen plant. These activities cannot be received in isolation and these are part of the entire composite contract. in this connection the assessee in their reply referred to Hon'ble CEGAT (CESTAT)'s decisions in a number of cases out of which the following two cases can be referred to: M/s. Daelirn Industrial Co. Ltd. v. CCE, Vadodara - 2003 (155) E.L.T.457 (Tri.-DeI.); M/s. L&T Ltd. v. C....
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....on turnkey basis. On this point there is absolutely no doubt. These works contract came into the ser vice Tax net only with effect from 2007. In such circumstances, for a period prior to 2007 works contract cannot be covered under 'Consulting Engineering Ser vices'. This view has been taken by the Tribunal in the case of M/s. L & T Ltd. v. CCE, Vadodara - 2007 ITS-1234 CESTAT - Date of Decision: 15-5-2007 = 2007 (7) S.T.R. 224 (T). Further, this Tribunal in the case of Blue Star Ltd. v. CCE, H bad - 2007 (5) S.T.R. 353 (Tri.-Bang.) has taken a decision by following the Daelim case that work contract cannot be vivisected and part of it subjected to duty. In the Daelim case, the contention of the appellant was that the contract was a work contract and design and drawing in question were incidental to the execution of the work contract has been accepted by the Tribunal. In the present case also, the drawing, design, etc., which appear to fall within the scope of 'Consulting Engineering services' have actually been carried out for manufacturing the plant to be supplied to the buyers. In that sense, these activities have not been rendered in the capacity of 'Consulting Engineering servi....