TaxTMI 
TaxTMI 
2023 (6) TMI 1158
X X X X Extracts X X X X
X X X X Extracts X X X X
....it. 2. The Department alleged that the Appellant has provided 'Consulting Engineering Service' to JUD, but failed to discharge service tax amounting to Rs.1,81,30,014/- including Education Cess and Higher- Education Cess. Accordingly a Show Cause Notice dated 14.11.2011 was issued to the Appellant demanding Service Tax along with interest. The Notice was adjudicated vide Order-in-Original dated 29.02.2012 by the Commissioner of Central Excise, Shillong, confirming the demands made in the Notice. Aggrieved against this impugned order, the Appellant filed the present appeal. 3. In their submissions, the Appellant stated that they have not provided 'Consulting Engineering Service' to JUD. As per the agreement entered by them with JUD on 15.10.2006, they have to provide technical assistance and guidance during erection and commissioning of the cement plant along with supply of necessary machinery and equipments as per the design and lay-out drawn by them. 4. As per the Clause 3.1 of the Agreement, the price schedule for the machine lines, which JUD had agreed to pay the Appellant is as follows: S. No. Section Sales Price FOR SITE (in Rs.) A Mechanical portion Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such services in the contract. The Appellant contended that their role was not that of a 'Consulting Engineer' as defined under Section 65(31) of the Finance Act, 1994. 6. The Appellant stated that the gross amount of Rs.65,76,56,249/- received by them include the value received towards supply of machineries manufactured by themselves, as a manufacturer in their Pune unit. The remaining amount pertains to supply of bought out items sold by them to JUD as a trader. The department has artificially broke up the gross receipts of Rs.65,76,56,249/- into 'manufacturing' and 'service' as follows: a) M/s.WIL as a manufacturer: An amount of Rs.13,68,01,000/- was realized towards supply of machinery and equipments manufactured by M/s. WIL themselves, inclusive of Rs.2,42,91,584/- paid towards payment of Central Excise duty by M/s. WIL. b) M/s. WIL as Service Provider: M/s. WIL has received an amount of Rs.52,08,55,249/- from JUD by issuance of commercial invoices, where the machinery and equipments were manufactured by other manufacturers. 7. The Appellant stated that the department has taken the entire value of Rs.52,08,55,249/- as value meant for providing 'Consulti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... received towards setting up of the cement plant. They arrived at the value meant for such services based on the man hours provided by them and paid service tax of Rs 8,76,154/- on the services. Accordingly, they contended that this gross amount of Rs.65,76,56,249/- received was exclusively meant for sale and supply of equipments only. The department cannot artificially bifurcate this value to assign any value for separately for the services portion. 13. We observe that the contention of the department is mainly based on some Clauses in the Agreement. The department contended that the Production lines were erected by the Appellant as per the specification of the design and engineering of the cement plant drawn by them. The Appellant also provided technical assistance and guidance during erection and commissioning of the plant as per para 2.3 of the Agreement. Performance guarantee of the machineries were provided by the Appellant. Engineering service and engineering documents such as drawings, technical data were provided by them as per para 2.8 of the Agreement. Erection manual and operation procedures for the equipments were provided by them as per para 2.10 and 2.11 of the Ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....55,249/-. We observe that the department considered this value as the price of the bought out items and contended that the Appellant has added 20% of the cost as profit margin. The Department has also considered the same amount as the taxable value for 'Consulting Engineer' services rendered by the Appellant to JUD and demanded service tax on that value. It is legally not tenable to consider the same value as supply of material and taxable value of services. 18. The Appellant stated that they have purchased goods valued Rs. 28.91 Crores from other sources for setting up of the cement plant. These goods were purchased from various manufacturers on payment of appropriate central excise duty. They have sold these bought out items to JUD after adding their profit margin, which is a normal trade practice. 19. The Appellant explained the reason for the difference in value given in the original invoices at the time of purchase of the goods and the value realized for the goods from JUD after its sale, as below: Basic value of the bought out items - 28.91 Cr Taxes paid on the goods procured - 6.69 Cr Freight cost - 6.27 Cr Over Heads (11%) - 3.18 Cr....