TMI Blog2023 (9) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... ers for procuring a SIM Card are generally processing charges for activating the cellular phone and consequently the same would necessarily be included in the value of the SIM Card. Thus, assessee appellant should have included the charges of engineering drawing and design in the assessable value of conveyor belts as per the provisions of Section 4 of Central Excise Act, 1944 - also, the payment of service tax on the charges recovered from the buyer of engineering drawing design is not a proper compliance of provisions of Central Excise Act, 1944 and thus short payment of Central Excise duty stands recoverable. The excise duty can be demanded on the same amount charged for drawing and designing, even if service tax has already been discharged on the same value, if they are related to the goods manufactured. As the department has not examined each contract separately to ascertain the liability, we deem it proper to remand the matter back to the adjudicating authority to examine the issue afresh and pass an appropriate order. Time limitation - HELD THAT:- As there is no suppression of fact with an intention to evade payment of tax has been established in this case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot related to the goods manufactured by them. They were related to post manufacturing activities such as civil, structural and electrical works, which is evident from the concerned contracts. The allegation of the department is mainly based on the contract entered by them with M/s.Shyam Ferro Alloys Ltd, wherein the first part of the contract consists of Design Engineering, manufacturing and supply of excisable goods and second part consists of Supervision of erection of excisable goods . In this contract, the scope of work consists of design engineering, manufacturing and supply of two strand CCM equipments, for which a single contract price of Rs.90,00,000/- was agreed. As per the contract Excise duty will be charged on the said price for supply. In other contracts, separate value has been mentioned for design services, for which they have paid service tax. 4. Drawing, designing engineering is integrally connected to the manufacturing process as well as erection, commissioning and installation service. For manufacturing of machines, drawing, design and engineering charges are always included in the price of the machineries and applicable excise duty is discharged. Dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019(11)TMI 171 (ii) CCE, Thane-I Vs Spectron Engineering Pvt. Ltd., 2020(33)GSTL.223 (Tri-Mumbai) (iii) CCE, Pondicherry Vs Erricsson India Pvt. Ltd. 2007(212)ELT 198(Tri-Chennai) 8. The Appellant stated that the Notice issued was barred by limitation of time. The Notice in this case was issued on 14.02.2008, for the period March 2003 to June 2007. Major portion of the demand was time barred. As there was no suppression of fact with an intention to evade payment of tax, they prayed for setting aside the demand confirmed on the ground of limitation. 9. In view of the above submissions, they prayed for setting aside the demands confirmed in the impugned order. 10. The Ld. A.R. reiterated the findings in the impugned order. They cited the decision of this Tribunal in the case of Phoenix Yule Ltd Vs CCE, Kol-III, wherein it has been held that the charges recovered towards engineering, drawing and designing are includable in the assessable value of the manufactured product. Accordingly, he prayed for rejecting the appeal filed by the appellant. 11. We observe that the issue involved in the present appeal is whether the drawing, designing and engineering charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the assessable value of the goods manufactured. But, the question here is whether the drawing and designing in these contracts executed by the Appellant pertains to goods manufactured as claimed by the department, or pertains to post manufacturing activities as claimed by the Appellant. We observe that Shri. Alok Kumar Kundu, Works Manager in his statement dated 24.05.2006 stated that drawing, design and engineering are the first step to the manufacture of their product and it is integrally connected to their manufacturing process and they cannot undertake any manufacturing activities without drawing and design . This statement clearly indicate that the drawing and design are integral part of the goods manufactures. Accordingly, as per Rule 6 of the Valuation Rules, the value of drawing, design and engineering , are includable in the assessable value. 14. The contention of the Appellant is that the Terms and Conditions and the nature of work performed in every contract is different. The department's allegation is mainly based on the one contract entered by them with M/s.Shyam Ferro Alloys Ltd, wherein the first part of the contract consists of Design Engineering, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve paid the tax wrongly under a different tax statute, it in fact does not satisfy the compliance of the statute under which the assessee is rightly required to pay his tax liability. This view has also been taken by the Hon ble Supreme Court in the case of M/s Idea Mobile Communication Ltd., (Supra). The relevant extract of the Hon ble Supreme Court s judgement is reproduced hereunder: ..18. The sales tax authorities have themselves conceded the position before the High Court that no assessment of sales tax would be made on the sale value of the SIM Card supplied by the appellant to their customers irrespective of the fact whether they have filed returns and remitted tax or not. it also cannot be disputed that even if sales tax is wrongly remitted and paid that would not absolve them from the responsibility of payment of service tax, if otherwise there is a liability to pay the same. If the article is not susceptible to tax under the Sales Tax Act, the amount of tax paid by the assessee could be refunded as the ase may be or, the assessee has to follow the law as may be applicable. But we cannot accept a position in law that even if tax is wrongly remitted that would absol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn and engineering charges in the assessable value. It is a matter of interpretation. The Appellant considered these charges were liable for service tax and paid service tax according to their interpretation and declared the same in the ST-3 returns filed. If the department was of the view that these charges are includable in the assessable value for the purpose of charging central excise duty, they would have advised the Appellant accordingly or issued demand within the normal period of limitation. As there is no suppression of fact with an intention to evade payment of tax has been established in this case, we hold that extended period cannot be invoked in this case. Accordingly, we set aside the demand confirmed by invoking the extended period of limitation. Since the exact quantum of duty, if any, liable to be confirmed within the normal period of limitation is not available in the records, the matter needs to be remanded back to the adjudicating authority on this count also to determine the duty liability, if any, on the basis of the above said observations. 18. The findings are summarized as below: (i) If the drawing and design charges collected are connected to the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
