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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 ..... of limitation - held that:- no basis or foundation established of bona fide belief. - nothing on record to suggest that the appellant had ever approached the Service Tax authorities to ascertain the details of their liability to pay service tax. - the department has rightly invoked the extended period of limitation. - ST/6 OF 2008 - A/85/2012/CSTB/C-I - Dated:- 14-2-2012 - ASHOK JINDAL, SAHAB SINGH, JJ. V. Sridharan for the Appellant. K.M. Mondal for the Respondent. ORDER Sahab Singh, Technical Member This appeal has come up before this Bench for hearing and disposal pursuant to CESTAT Misc. Order No. M/434/CSTB/WZB/2009/C.II dated 7.10.2009. This appeal arises out of the Order-in-Original No. 18/P-III/STC/COMMR/2007 dtd. 22/11/2007 passed by the Commissioner of Central Excise, Pune. III. Background of the case. 2. Briefly stated, the facts of the case are that the appellant, M/s. Suzlon Infrastructure Limited (in short M/s. SIL) formerly known as M/s Suzlon Developers Limited is an associate company of M/s. Suzlon Energy Limited (in short M/s. SEL). It is engaged, inter alia , in erection, commissioning or installation of windmills or wind turbin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning or installation of WTG and for this purpose, it was issuing four types of invoices to its customers relating to :- ( i ) Construction of civil foundation, control room, transformer plinth, crane platform, road for crane movement, electrical yarn fencing etc. ( ii ) Supply and installation of HT Electrical yard with VCB, outdoor type CT/PT and HT Transmission line from windmill to grid interconnection and related facilities. ( iii ) Erection and installation of windmill consisting of unloading and safe-keeping of windmill equipment, assembly, erection and installation of windmill tower and Wind Turbine Generator. ( iv ) Charges towards final testing and commissioning of the wind mills. 2.4 It appeared that civil foundation is an integral part of erection and installation of the wind mill and the control room and electrical yard etc. also form an integral part for commissioning of the wind mill without which the commissioning of wind mill or WTG is not complete. 2.5 It was also found that M/s. SIL was discharging its service tax liability on the full value realized by it from its customers in respect of invoices mentioned at Sr. No. (iii) and (iv) above. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has filed this appeal. 3. We have heard Shri V. Sridharan, Sr. Advocate for the appellant and Shri K.M. Mondal, Id. Consultant for the respondent. 4. Referring to a Work Order, placed on the appellant by its customer, Sr. Advocate contended that the Work Order would show that the appellant had four separate contracts embodied in a single work order. According to the appellants, it carried out 4 types of activities namely. ( i ) civil work including foundation and allied activities of Wind Farm Project, ( ii ) supply and installation of electrical equipments; ( iii ) erection and installation of windmill and ( iv ) final testing and commissioning of windmill. 4.1 He submitted that the disputes are limited to two activities namely ( i ) civil work including foundation and allied activities of Wind Farm Project and ( ii ) supply and installation of electrical equipments. 4.2 Elaborating his submission, the Ld. Sr. Advocate submitted that each of the four types of activities carried out by the appellant is distinct and separate. (Civil work has been done by a sub-contractor who is registered under the category of "commercial or industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctricity generated by the WTGs cannot be evacuated from the windmill to the Electricity Board grid. Electrical installation is, therefore, an integral part of the Windmill. Therefore, the appellant's claim that civil foundation and electrical installation are separate activities is not acceptable. Consequently, the appellant's claim for the benefit of Notification No. 19/2003-ST dated 21.8.2003 as amended is not available to it. He also submitted that the appellant's contracts with its sub-contractors are not relevant as the same are not under dispute. 5.1 In regard to the case laws cited by the Sr. Advocate, the Ld. Consultant submitted that the case laws cited have no application to the facts of this case. He submitted that the Ld. Sr. Advocate overlooked the fact that the appellant had undertaken the entire services of erection, commissioning or installation of wind farm project of which electrical installation is a part. In his submission, wind farm project is not complete without electrical installation. In the context of service under the Finance Act, 1994, the case laws cited are totally misplaced. 5.2 On limitation, the Ld. Consultant submitted that it is not at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j Blue Diamond, Koregoan Park, Pune - 1 Ref : Your offer no. SDPL/MKTG/MUM/MAH/HHL/04-05/043 dtd. 08.11.2004 Work order for Erection and Installation of our 2 Nos. WTGS (1250 KW EACH) at Dhulia Site in Maharashtra. With reference to the above and our personnel discussion with Mr. I.C. Mangal and Mr. Santosh Mahadik we are pleased to issue this work order for services of construction, erection and installation of our 2 nos. windmills at Dhulia site in Maharashtra. 1. Scope of work Scope of work will include he following: (A) civil Civil work including Foundation, Control Room Transformer plinth as per your drawing approved by Hercules Hoists Limited (HHL) (B) Electrical Supply of electrical items for D.P. structure upto metering station. Supply of electrical items for internal external line upto sub station. Labour for all installation and electrical work for D.P. Structure. Up to metering station and cabling, internal line, earthing, metering, etc. at our site. (C) Erection Commissioning Labour for Erection of towers WTG and installation commissioning of WTG. All the material for erection installation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is work order. (The current prevailing TDS rate is 2.091%). In case of any delay in making the payments as per the contract, we agree to pay an interest @ 12% p.a. 5. Other charges: The payment of MEDA charges of Rs. 37.50 lacs per WTG of 1.25 MW each (Rs. 30.00 lacs per MW) totalling to Rs. 75.00 lacs will be paid to MEDA through Suzlon Developers Pvt. Ltd. A cheque of Rs. 75.00 lacs is enclosed with this order. Also, the MEDA processing charges @ Rs. 6.25 lacs per WTG of 1.25 MW each (Rs. 5.00 lacs per MW) totalling to Rs. 12.50 will be paid to MEDA through Suzlon Developers Pvt. Ltd. A cheque of Rs. 12.50 lacs is enclosed with this order. Any increase new charges imposed by MSEB/MEDA will be borne by us. Suzlon will be responsible for liaisoning with MSEB/MEDA or any other government or semi government undertaking for setting up wind power project. HHL will provide all the relevant documents and support to Suzlon. 6. General Terms This order is subject to jurisdiction of Mumbai. This order is subject to Force Majeure conditions as per your offer. This order is subject to Standard Arbitration. Kindly return us a copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India and is a leading manufacturer of Wind Turbine Generators ("WTGs") in India and in addition to supply of WTGs, offers " total solutions " in wind power generation comprising wind resource mapping, identification of suitable sites, establishment of wind farm project including civil work and installation and commissioning of WTGs and provision of operations and maintenance services to its customers in conjunction with its subsidiaries and associate companies, (emphasis supplied). B. SDL, a limited company incorporated in India and owned by the promoters of the Company, is primarily engaged in the business of providing Services (as hereinafter defined) for the establishment of windfarm projects for the customers of the company (the "Customers"). SDL is also engaged in the business of generating and selling electricity through the ownership of WTGs. C. The Services are provided to the Company or to the customers of the Company, on an exclusive basis, for the purposes of setting up windfarm projects. The agreement defines "Services" as follows"- "Services" mean all of the services required for the erection, installation and commissioning of the windfarm project includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistent with the terms and conditions agreed to between the company and the customer; or (ii) prevent the customer from entering into such agreement with SDL; (iii) result in company being unable to provide " integrated solutions " in wind power generation to such customer; (emphasis supplied) and ( b ) It shall not commence or carry on any other business other than presently carried on without the prior written consent of the company ( c ) It shall obtain all government and regulatory approvals, and registrations, necessary for the carrying on of the business of providing the services to the customers; ( d ) It shall ensure that the provision of services does not in any way contravene any Applicable Laws; ( e ) It shall ensure that it complies with Applicable Laws in the conduct of its business. The Company undertakes that a. It shall notify SDL about the terms of the arrangement with the customer in relation to the " integrated solutions " offered to the customer."(emphasis supplied) 10.1 On a 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese judgments have no application to the facts of this case. We are not concerned with the classification of Windmill or its part under Central Excise Tariff Act, 1985. We are concerned herewith the classification of services of "erection, commissioning or installation" of Windfarm Project (WTGs) under the Finance Act, 1994. Undisputedly, the appellant is providing integrated services of "erection, commissioning or installation of Windfarm Project (WTGs) of which electrical installation is a part. It is needles to say that without electrical installation, Windfarm Project will remain incomplete. We therefore, hold that the (appellant's contracts with its customers are composite contracts for erection, commissioning or installation of Windfarm Project of which electrical installation is a part. Consequently, we hold that electrical installation is not a separate activity distinct from Windfarm Project. Issue No. II 11. We shall now examine the issue No.(II) that is, whether the appellant is eligible for the benefit of Notification 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 "ere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. a commissioning and installation agency also supplies under a contract a plant, machinery or equipment, parts and any other material during the course of providing erection, commissioning or installation of services. 11.2 As per the Revenue, the benefit of the Notification was not available to the appellant, because they had not supplied the WTGs to its customers. They had only provided the services of erection, commissioning or installation of WTGs supplied by M/s. SEL, which is altogether an independent entity. 11.3 We find that M/s. SEL are manufacturers of WTG. They had supplied WTGs and parts thereof and also electrical items to the customers under separate invoices. One such invoice dated 7.2.2005 issued by M/s. SEL to M/s. Hercules Hoists Limited is found at page 17 of the Revenue's written submission. The relevant portion of the invoice is reproduced below for better understanding and appreciation. "SUZLON ENERGY LTD, Plot No. H-24/25 M.G Udhyog Nagar, OIDC Industrial Estate, Near Water Tank, Dabhel, Daman 396 210 (U.T.) India ST No. DI-600 dt.26.09.1996 C.ST. No. DI/CST/371 DT. 26.09.1996 INVOICE To. M/s. Herc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said plant, machinery or equipment. Since the appellant had not supplied WTGs to its customers and provided only the service of erection, commissioning or installation of WTGs supplied by M/s. SEL, they were not eligible for the benefit of the Notification. 11.5 It is claimed by the appellant that under separate contract with their customers, they had not only supplied electrical components but also carried out the work of electrical installation and hence they were eligible for the benefit of Notification. This claim merits to be rejected for the reason more than one. Firstly, we have already held herein before that as far as the appellant is concerned, supply of some material including some electrical items was only incidental to the services of "erection, commissioning or installation" of WTGs. Secondly, in terms of the Agreement for the Services dated 11.6.2005 between M/s. SEL and the appellant as also in terms of various Work Orders placed on the appellant by its customers, there cannot be any doubt that the contracts were composite contracts for providing services of erection, commissioning or installation of WTGs. Thirdly, civil works and electrical works are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As per provisions of Section 70 of the Finance Act, 1994, the assessee is required to make self-assessment of service tax due on the services provided by it and file ST 3 Returns with the jurisdictional Supdt. of Central Excise. Examination of ST 3 returns shows that the assessee has incorrectly assessed the service tax payable and has suppressed the correct value of taxable services provided by it. Further, the assessee has also suppressed the fact from the department that it has availed benefit of Notification No. 19/2003 ST dated 21.8.2003 although it did not supply WTGs to its customers. 12.1 We have given careful consideration to the above submissions of both the sides. We do not find any basis or foundation established of bona fide belief. We do not find anything on record to suggest that the appellant had ever approached the Service Tax authorities to ascertain the details of their liability to pay service tax. It is needless to say that the belief can be said to be bona fide only when it is formed after all the reasonable consideration are taken into account. In the present case, we do not find any such consideration having been taken by the appellant. We are, therefo ..... 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