TMI Blog2007 (10) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... vices in the capacity of consulting engineers. The adjudicating authority examined the issue and came to the conclusion that the appellants had actually supplied air/gas separation plants to their customers on turn 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with their customers for supply of these plants on turnkey basis. It was urged that the issue is squarely covered in favour of the appellant in the case of M/s. Daelim Indus. Co. v. CCE -2006 (3) S.T.R. 124 (T)=2003 (155) E.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices rendered to the client in the capacity of the 'Consulting Engineer'. The Original Authority has given detailed reasoning for dropping the demands. The findings recorded in Paras 29 and 30 of Order-in- Original is reproduced herein below. (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 thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from 2003 and in any case they cannot be charged to Service Tax under the category of 'Consulting Engineering service'. 6.2 Further, on going through the eight contracts which are under consideration, we find that they are actually work contracts 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, desi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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