TaxTMI 
TaxTMI 
2023 (6) TMI 1158
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....e 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 Prices 1 Lime Stone crushing, Storage & Tran....
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....unt 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 'Consulting Engineer's service, after excluding the value of Rs.13,68,01,000/- towards their own manufactured goods from the gross receipt of Rs.65,76,56,249/-. They have not taken into account the bought out items supplied by the Appell....
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.... 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 Agreement. Project guarantee was also provided by them. However, no value has been assigned for all these services. Hence, part of the gross receipt has been assigned for these services and service tax was demanded. 14. The Appellant stated ....
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....ngineer' 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 Interest carrying cost on retention money - 1 Cr Interest for outstanding from JUD - 3 Cr Total - 49.05 Cr As per the above work sheet, the Appellant stated that the profit margin was only in the range of 7.5% to 10% and not 20% as alleged by the department. In any case, the profit ....