C.C.E & S.T.-Silvasa Vs Aalidhra Textool Engineers Pvt Ltd (CESTAT Ahmedabad)
CESTAT Ahmedabad held that as excise duty is levied on the entire value of supply of machinery. Hence, service tax cannot be demanded separately on activity of erection, commissioning and installation of the said machinery.
Facts-
The respondents are engaged in the manufacturing of textile machineries. As per the contract with the buyer, on an agreed sales price, the respondent is under obligation to manufacture, pack, transport, deliver and erect and install the machinery at the buyer’s site.
The respondent has discharged excise duty on their total sale value including the erection, installation and commissioning of such machinery for the period July-2003 to March-2008. The adjudicating authority while adjudicating the show cause notices dropped the same vide adjudication order. The revenue being aggrieved by the original order to the extent demand pertains to the period 01.06.2007 onwards, filed the present appeal on the ground that post 01.06.2007, since the respondent have supplied the goods and carried out erection, installation and commissioning, the service should have been classified under Works Contract Service and respondent was liable to pay service tax.
Conclusion-
It is settled that where the entire value of the goods is towards sale of the goods and subjected to excise duty/customs duty no part of the same can be said to have been collected towards any service. Therefore, involving the same set of facts, in the present case where the entire value has suffered excise duty and the buyer is under obligation to not only manufacture and supply the machinery but also to carry out activity of erection, commissioning and installation of the said machinery, the service tax cannot be demanded.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the respondents are engaged in the manufacturing of textile machineries. As per the contract with the buyer, on an agreed sales price, the respondent is under obligation to manufacture, pack, transport, deliver and erect and install the machinery at the buyer’s site. The respondent have discharged excise duty on their total sale value including the erection, installation and commissioning of such machinery for the period July-2003 to March-2008. The adjudicating authority while adjudicating the show cause notices dropped the same vide adjudication order. The revenue being aggrieved by the Order-In-Original to the extent demand pertains to the period 01.06.2007 onwards, filed the present appeals on the ground that post 01.06.2007, since the respondent have supplied the goods and carried out erection, installation and commissioning, the service should have been classified under Works Contract Service and respondent was liable to pay service tax.
02. Shri Tara Prakash, learned Assistant Commissioner (AR) appearing on behalf of the revenue appellant submits that there is no dispute that from 0 1.06.2007 onwards the supply of goods along with erection, installation and commissioning falls under the Works Contract Service and that composite activity is liable to service tax therefore, the adjudicating authority has erred in dropping the demand. He reiterates the grounds of appeal. He placed reliance upon following judgments:-
