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TMI Blog2012 (4) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... rs (in short WTG) are manufactured and supplied by M/s SEL. It had taken Service Tax Registration for installation & commissioning services on 18.7.2003 which was subsequently amended to endorse other services also. 2.1 Based on intelligence that M/s SIL was indulging in evasion of service tax under the category of "Erection, Commissioning or Installation service" as defined in Sec, 65(39a) of the Finance Act, 1994, the officers of Directorate General of Central Excise Intelligence (DGCEI), New Delhi conducted investigation into the matter. In the course of investigation, the officers examined the relevant records and recorded statements of some of the functionaries of the appellant company. In his statement dated 27.10.2005, Shri Bipin Shah, General Manager had, inter alia, stated that their company is engaged in project execution work comprising civil construction work, erection installation and commissioning of WTG on exclusive basis to the customers of M/s. SEL as per Agreement dated 11.6.2005 entered into between M/s. SEL and the appellant company. 2.2 Similarly, in his statement dated 7.11.05 Shri Harish H. Mehta, Director of the appellant company had, inter alia, stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling the benefit under Notification No.19/2003-ST dated 21/8/2003 which provides that in case of a contract involving erection, commissioning or installation services along with the supply of plant, machinery or equipment, service tax will be payable only on 33% of the gross amount charged by the service provider from its customers for erection, commissioning or installation and supply of plant, machinery and equipment, 2.6 Since M/s. SIL was providing only the services of erection, commissioning or installation of WTGs, it appeared that it was not eligible to the benefit of Notification No. 19/2003-ST dated 21.8.2003. M/s. SIL, was, therefore, served with a show-cause notice dated 28.8.2006 demanding service tax of Rs. 22,04,53,114/- and Education Cess of Rs. 44,09,131/- for the period 10.9.04 to 30.9.2005. The notice also proposed to impose penalty on it under Sec. 76 for contravention of provisions of Section 68 and penalty under Section 78 of Chapter V of the Finance Act, 1994 for evasion of service tax by wilful suppression of facts. The notice also demanded interest on the service tax not paid during the period 10.9.2004 to 30.9.2005 under the provisions of Section 75 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gross amount charged from the appellant by availing the benefit of Notification No. 15/2004-ST dated 10.9.2004 as amended. Similarly, electrical work has been done by a subcontractor who is registered under the category of 'Erection, Commissioning or Installation service' and has discharged service tax on the entire gross amount charged from the appellant without claiming any abatement under Notification No. 19/2003-ST dated 21.8.2003 as amended. Hence the appellant has claimed benefit of Notification No. 19/2003-ST dated 21.8.2003 as amended. 4.3 The Ld. Sr. Advocate finally limited his submission to supply and installation of electrical equipments. He contented that erection, commissioning or installation of electrical equipments is a separate activity having no relation to erection, commissioning or installation of windmill or WTGs. In this connection, he relied upon the decisions of the Hon'ble Supreme Court in the case of Nicco Corporation Ltd. v. CCE, 2006 (203) ELT 362 (SC), Skytone Electricals (India) Ltd. v. Commissioner 2008 (225) ELT A 97 (SC) holding that wires and cables are not parts of windmill. 4.4 On limitation, he submitted that the present case involves a pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct value of taxable services in ST. 3 returns filed with the department. It had suppressed the fact from the department that it had availed the benefit of Notification No. 19/03-ST dated 21.8.03 although it did not supply WTGs to its customers. Therefore, the extended period of limitation has been correctly invoked in this case. In his submission, the appellant has no case both on merit as well as on limitation. He, therefore prayed for dismissal of the appeal. 6. We have carefully considered the submissions of both sides. We have also examined the relevant records including the impugned order and the written submission filed earlier by both sides. 7. We find that the following issues arise for our consideration:- (I) Whether the appellant's contracts with its customers are composite contract for "erection, commissioning or installation of Wind Farm Project of which electrical installation is a part, as contended by the Revenue or the electrical work is a separate activity distinct from Wind Farm Project, as contended by the appellant ; (II) Whether the appellant is eligible for the benefit of Notification No. 19/2003-ST dated 21.8.2003 as amended ; and (III) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allation and commissioning & the technical guidelines will be supplied by SDPL. (D) Loading & Unloading ♦ Loading and unloading and material security at our site (E) Temporary road for movement of crane and preparation of crane platform. PRICE The price shall be Rs. 75.00 lacs per WTG totalling of Rs. 150.00 lacs for 2 nos. WTGs for the scope of activities as mentioned at clause 1 above. The break up of this price shall be as below: Sr. No. Description Amount per WTG Amount for 2 Nos. of WTGs (Rs. In Lacs) 1. Windmill project execution (for 74 Mtrs. Hub height tubular tower) Civil Work including windmill foundation, control room, transformer plinth, electrical yard fencing, temporary road for movement of crane and preparation of crane platform 31,00 62.00 2. Erection & installation of windmill including loading, unloading & material handling 13.00 26.00 3. Supply and installation of HT electrical system Including cabling, DP structure/VCB yard, common metering and HT transmission line from windmill to gird interconnection point. 30.00 60.00 4. Final testing & commissioning of windmill 1.00 2.00 Total (Rupe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ♦ This order is subject to Standard Arbitration. Kindly return us a copy of Work Order duly signed as acceptance to the terms and conditions mentioned above and issue a receipt for the amount paid. Thanking you, Yours faithfully, For Hercules Hoists Limited Sd. M.S. Saigal (President) 9.1 On perusing the Work Order we find that it is for erection and installation of 2 Nos. of WTGS (1250 KW each) at Dhulia Site in Maharashtra. We also find that in the Work Order indicates Scope of work which includes the following under the board heading of- (A) Civil, (B) Electrical,. (C) Erection & Commissioning, (D) Loading & Unloading, (E) Temporary road for movement of crane and preparation of crane platform. 9.2 At page 2 of the Work Order, the price per WTG is shown as Rs. 75 lakhs and then price break-up is shown in the tabular form under the Column "Description" in respect of each item of work. At page 3 of the Work order, we also find that payment schedule had been indicated as follows:- *Rs. 82.50 lakhs with order *Rs. 40 lakhs on 15.12.2004 (PDC) *Rs. 27.50 lakhs on 15.01.2005 (PDC). 9.3 We have also perused 4 types of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired for the erection, installation and commissioning of the windfarm project including, without limitation, the following services: a. development of infrastructure for setting up of wind farm project including construction of evacuation facilities and construction of approach roads; and b. laying of foundation and erection, installation and commissioning of WTG, construction of control rooms, construction for the transformers, construction of evacuation facilities, construction of approach roads; and c. all related electrical work including material. 3. Agreement for Services 3.1 SDL shall provide the Company with such information as it requests from time to time in order to submit proposals to Customers for setting up WTGs. 3.2 SDL hereby undertakes that it shall offer to provide all or any of the Services to Customers, at the instance of the Company. The procedure for which shall be as follows:- (a) The Company may at any time at its discretion instruct SDL to perform the services for its customers; (b) The Company shall specify the location, the date by which the services have to be provided to the customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... careful examination of the various clauses of the "Agreement for Services" reproduced above, we find that the company (M/s. SEL offers "total solutions" to its customers in establishment of windfarm project including civil work and installation and commissioning of WTGs and in this endeavour the appellant (M/s. SIL) provides the required services (as defined in the Agreement) to the customers of the company. It is quite obvious from "Agreement of Services" that the appellant has to provide "integrated solutions" to the customers in wind power generation. From the definition of "Services" as reproduced above, we note that the services required for the erection, installation and commissioning of the windfarm project, inter alia, include all related electrical work including material. Reading the definition of "Services" together with the various clauses reproduced above, we have no doubt in our minds that the main object of the Agreement, in so far as the appellant is concerned, is to provide all of the services required for the erection, installation and commissioning of the Windfarm project (WTGs) to the customers. In that process, while carrying out related electrical work, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 19/03 ST dated 21.8.2003 in respect of electrical installation. It is the contention of the appellant that while providing the service of "erection, commissioning or installation" of electrical installation to its customers, it has also supplied the material including wires and cables required for the same. Hence it is eligible for the abatement under the aforesaid Notification.) For the sake of convenience, we reproduce the Notification itself inserted by Notification No. 12/2004 ST dated 10.9.2004. "NOTIFICATION No. 19/2003-S.T., DATED 21-8-2003 In exercise of the powers conferred by section 93 of the Finance act, 1994(32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided to a customer in relation to erection, commissioning or installation by a commissioning and installation agency, form so much of the service tax leviable thereon under Section 66 of the said Act, as is in excess of the amount of service tax calculated on a value which is equivalent to thirty-three per cent, of the gross amount charged from the customer under a contract for supplying a plant, machinery or equipm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T.) India ST No. DI-600 dt.26.09.1996 C.ST. No. DI/CST/371 DT. 26.09.1996 INVOICE To. M/s. Hercules Hoists Limited 110. Minerva Industrial Estate Mulund (West) Mumbai 400080 Delivery Address: M/s. Hercules Hoists Limited Village : Petle Taluka : Sakri District: Dhuie Maharashtra P.O. No.: PO45-00221-A Date : 18/11/2004 Invoice No: SEL/DAMAN/SUPPLY/2004-2005/055 Date : 28.02.2005 Reference No. 7444000055 Sr. No. Description Qty. Rate Per Unit (Rs.) Value in Rupees 00020 Supply of SUZLON WTG 1.25MW S66 TubTcwr72M Ht (Ex works Daman) Wind Turbine Generator comprising mainly of : ♦ Nacelle ♦ Hub and Set of 3 Blades ♦ Controller (Micro Processor) ♦ Tower and Hardware 1 47,30,000 47,30,000 Packing, Handling, Loading, Insurance and Transportation Charges for Delivery at your site 825,000 825,000 Supply of Electrical Items Including Transformers up to D.P. structure internal line up to Metering 1,500,000 1,500,000 Total 49,625,000 AGAINST 'C' FORM Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less to say that without civil foundation, erection of tower is not possible. Similarly, without electrical installation, commissioning of Wind Mill is not possible inasmuch as electricity generated by WTGs cannot be evacuated from the Wind Mill to the Electricity Board. 11.6 We find that in his findings the Commissioner has observed that the mere issue of 4 different invoices would not make the activities independent of each other. The Agreement for Services specifies the service as services required for erection, installation and commissioning of Windfarm Project. In his findings, he has observed that the entire gamut of the installation commences with construction of the civil foundation and progresses into installation of electrical yard and transmission line for grid connectivity to erection of the windmill to testing and commissioning of the windmills. Thus, each process is dependant on every subsequent process and thus are inherent and inseparable parts of the work of the entire agreement relating to complete erection, installation and commissioning of the WTGs. In short, civil foundation and electrical installation are inseparate part of windfarm project. 11.7 Once it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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