TMI Blog2003 (6) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court of India. The contract was on lump sum turnkey basis. The lump sum price had an Indian rupee payment of about Rs. 184 crores US $ payment of about 2.2 crores. The contract involved "residual process design, detailed engineering, procurement, supply, construction, fabrication, erection, installation, testing commissioning and mechanical guarantee". 2. A show cause notice dated 16-4-2001 was issued by the Additional Commissioner of Central Excise, Vadodara holding that the appellant was liable to pay service tax on residual process design and detailed engineering, "commissioning of plant" applicable to "consulting engineers". The appellant contested the proposal contending that theirs was a construction contract and they have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individually as per the contract terms, only for the purpose of facilitating periodic installment payments. Learned Counsel has pointed out that each component of the project involving design, drawing, procurement, supply, fabrication, etc. cannot be vivisected and considered as different transactions. Learned Counsel pointed out that a mere perusal of the costs of the various components would show that the dominant idea of the contract is the execution of desulphurisation plant. He also pointed out that the cost of process design, detailed engineering etc. carved out by the Central Excise Authorities was less than 7% of the total cost of the contract. Learned Counsel has also taken us to the relevant case law to show that in the case of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.21 of the letter dated February 2, 1998 reads as under : "Based on your offer, the Contract Value works out to fix lump sum of US $ 22,270,000 (US Dollar Twenty Two Million Two Hundred Seventy Thousand only) plus INR Rs. 1,836,800,000 (Rupees One Billion Eight Hundred Thirty Six Million Eight Hundred Thousand only) on the basis of Lump sum price(s) included in Price Schedule annexed and considering rate of exchange as 1 US $ = Rs. 38.84 for FE component quoted by you for performing all works covered under this contract on turnkey basis. The price schedule includes the break up of Lump sum prices." The price was the lump sum one and Clause 2.2 of the letter dated 2-2-98 of IOC makes it clear that "Contractor shall furnish further break ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing conditions are satisfied :- (i) The DHDS and U O and all its components/facilities have been successfully tested after installation at site individually and as a whole and Final Test Certificate shall have been issued in respect thereof. (ii) The DHDS and U O successfully commissioned by continuous and stabilized operation upto full capacity for a period of not less than 7 (seven) days. (iii) The Engineer-in-charge shall have issued a Final Testing and Commissioning Certificate as elsewhere herein envisaged". Clause 10 which relates to drawings by the appellant reads as under : "10.1 The drawings accompanying the bidding document are indicative of scope of work and issued for bidding purpose only. These drawings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment or not or have not been indicated by the contractor in the data/drawings furnished along with his bid. 10.4 EIL/Owner may review and offer comments/suggestion on the layout, structurals schemes, designs and/or drawing prepared by the contractor and the later shall adhere to sub-comments/suggestions and revise/re-do these drawings accordingly and incorporate the same in the construction without any extra cost to the owner maintaining the original time schedule. However, reviewing of design/drawings is not obligatory on the part of EIL/Owner and complete correctness/soundness of the design/drawings shall be sole responsibility of the contractor irrespective of the fact whether the same has been reviewed by the EIL/Owner or not. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
