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TMI Blog2013 (3) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as ‘goods’ and the said finding cannot be considered unreasonable. - The Hon’ble Supreme Court in the case of Associated Cement Companies Ltd. v. Commissioner of Customs [2001 (1) TMI 248 - SUPREME COURT OF INDIA], has held that drawings, plans, manuals, etc., specified in Chapter 49 of the Tariff Act are thus statutorily regarded as goods attracting a specified rate of Customs duty on their import into India. Designs and drawings which were imported and assessed as ‘goods’, cannot be subjected to Service tax, hence, no Service tax is chargeable on that part attributing towards the value of designs and drawings. Regarding levy of service tax on import services - Supervision services - held that:- levy of Service tax on the service provided by a foreign service provider and availed by an Indian receiver has been introduced by an amendment to Section 66 of Finance Act, 1994 i.e. by inserting a new Section 66A in the Finance Act w.e.f. 18-4-2006. The Service tax, it is held, cannot be charged for services rendered for the period prior to 18-4-2006 by a foreign service provider to a service receiver in India irrespective of the fact whether the service is received in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Manufacture of Indigenous Equipment at Indian works J. YEN 1147,000 3. Supervision of Erection J. YEN 55,858,900 4. Start-Up commissioning J. YEN 35,671,700 2. M/s Mitsui Co. Ltd., 2-1, Ohtemachi 1- Chrome, Chiyoda- Ku, Tokyo, Japan CRMP/COM/ SPM/04 dated 6-6-1998 2.1 Supply of indigenous Design Drawing to be delivered in India at Purchaser s Engineer s Office Rs. 1,75,79000 2.2 The relevant Clauses in respect of Agreement No. CRMP/CON/ SPM/03 are reproduced below : 1.1.1 Supply of imported designs and drawings 1.1.1 In consideration of the payments made by the Purchaser, the Contractor shall supply imported designs and drawings. The services to be provided by the Contractor shall ensure a co ordinated design and drawing in order to enable the Purchaser to efficiently operate Skin Pass Mill having an annual capacity of 1,000,000 tonnes 1.1.2 Supervision by Foreign Technicians : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said demand notice was confirmed by the Commissioner of Central Excise and Service Tax, Jamshedpur vide its Order-in-Original No. 1/S.Tax/Commissioner/06, dated 25-7-2006. Aggrieved by the said order, the appellant had filed an appeal before this Tribunal. 2.6 This Tribunal, after hearing both sides, remanded the case to the adjudicating authority making following observations : 4. We find that in this case major portion of the demand is in respect of supply of imported designs and drawings. As per the Appellant the same were considered at the time of import of goods and bill of entry was filed which was duly assessed under the Customs Act. The same pleas raised in respect of the engineering and designs originating in India. We find that as the designs and drawings which are part of the contract are treated as goods by the Customs Authorities and were assessed under the Customs Act therefore the finding that the same are service is not sustainable and requires re-consideration. The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication. The adjudicating authority will decide afresh all the issues after affording an opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In support, he has referred to the Tribunal s decision in the case of Solitz Corporation v. Commissioner of Service Tax, New Delhi reported in 2009 (14) S.T.R. 642 (Tri.-Del.) wherein it is held that designs and drawings sent as parcel or through courier attracting provisions of Customs Act, 1962 ought to be treated as goods . Also, he has referred to the Tribunal s decision in the case of Kirloskar Electric Co. Ltd. v. CCE reported in 2007 (6) S.T.R. 173 and Commissioner of Bangalore v. MICO Ltd. reported in 2008 (11) S.T.R. 28, wherein it is also held that supply of designs and drawings would invariably constitute supply of goods and attract the provisions of Customs Act and therefore, any demand of Service tax on the said goods are liable to be quashed. Further, he has submitted that supply of indigenous designs and drawings by the local buyers cannot be viewed differently. The contention is that design and drawing on a media is classifiable under Chapter 4906 of the Central Excise Tariff Act, 1985 attracting nil rate of duty. Therefore, going by the same principle as applicable to the imported goods, indigenous drawings and designs shall be treated as goods , applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Indian National Ship Owners Association v. UOI reported in 2009 (13) S.T.R. 235 (Bom.) wherein it is held that the charge on services provided outside India would come into effect only from 18-4-2006 with the insertion of Section 66A in the Finance Act, 1994 and their Lordship had declared Rule 2(l)(d)(iv) as invalid as same cannot charge service tax in absence of any statutory support. The said judgment later upheld by the Hon ble Supreme Court in the case of UOI Others v. Indian National Ship Owners reported in 2009- TIOL-129-SC-ST = 2011 (21) S.T.R. 3 (S.C.). 4.1 Per contra, the ld. Spl. Counsel, Shri D.K. Acharya, appearing for the Department, submitted that it is the second round of litigation before this Tribunal. He has submitted that the appellant had filed Bill of Entry having Sl. No. 25 dated 2nd January, 2001 for total value of ₹ 8.82 crores. It is his submission that the said Bill of Entry is not an authenticated one and not necessarily connected with the present case. Advancing reasons he has contended that : (i) as per Schedule 4 of the Contract providing terms of payment by M/s. TISCO to the appellant, 5% of contract price for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 2001 (130) E.L.T. 726 (Kar.) = 2006 (2) S.T.R. 386 (Ker.) and Hon ble High Court of Calcutta in the case of M.N. Dastur Company Ltd. v. Union of India reported in 2002 (140) E.L.T. 341 (Cal.) = 2006 (2) S.T.R. 532 (Cal.). 4.6 Further the ld. Spl. Counsel submitted that even though erection, installation and commissioning services became taxable from 10-9-2004 by inserting a specific entry in the Finance Act, 1994, it is incorrect to say that when a new entry is introduced it presupposes that same services were not covered by the existing entry. He has referred to C.B.E. C. s Circular dated 2-7-1997 and C.B.E. C. s Circular dated 18-12-2002 and submitted that when a new or more specific entry has been created from 10-9-2004, accordingly, commissioning and installation services were though taken out of the scope of the definition of consulting engineer but without invalidating its earlier coverage under the more generic entry of Consulting Engineer . He has referred to the decisions of this Tribunal in the case of B. Rama Rao Co. v. Commissioner of Service Tax, Hyderabad reported in 2011 (23) S.T.R. 49 (Tri.-Bang.) and also in the case of Sunil Hi-Tech Engineers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) S.T.R. 260 (S.C.) wherein it was held that the Service tax on Mandap Keepers and Outdoor Caterers is in pith and substance a tax on services and not a tax on sale of goods despite an element of sale involved in such cases. Further, he has referred the judgment of the Hon ble Supreme Court in the case of Idea Mobile Communication reported in 2011 (23) S.T.R. 433 (S.C.) = 2006 (3) S.T.R. 260 (S.C.) wherein the decision of the Tribunal that Service tax is not sustainable as sales tax is paid on SIM Cards, was held to be wrong. Further he has submitted that the demand of Service tax is justified as the appellant had rendered 908 man days of consulting engineering, supervision services in mechanical and electrical engineering branches and were having a project office in Jamshedpur and a liaison office in Delhi and having their presence in India for more than one and half decade. 5.1 In his rejoinder, the ld. Advocate for the appellant submitted that the Bills of Entry placed in the Appeal Paper Book at Page 328, would show that the goods were imported by M/s. TISCO and the invoice value is JAP Yen 21120 000, which matches with the invoice raised by the appellant on TISCO for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the C.B.E. C. vide Circular No. 79/9/2004-S.T., dated 13-5-2004. 5.2 The ld. Advocate further submitted that during the relevant period, there had been a confusion regarding taxability of foreign companies and the appellants have also not suppressed any information from the Department. Hence, invoking of extended period of limitation is incorrect. He has referred to the decisions of the Tribunal in the case of CCE, Tirunelveli v. Global Software Solutions (P) Ltd. - 2011 (24) S.T.R. 707 and CCE, Allahabad v. A.P.S.M Study Centre - 2011 (24) S.T.R. 717. Further, he has submitted that the Tribunal in the case of CCE, Kanpur v. Institute Francais Du Petrole (IFP) - 2011 (24) S.T.R. 696, held that suppression cannot be assumed against a foreign service provider for invoking the extended period of limitation. 6. Heard both sides at length and perused the records. 7.1 The present issue revolves around the fact that whether the amount of ₹ 15.68 crores received by the appellant from M/s. TISCO during the period from 1-4-1999 to 30-11-2001 for supply services are liable to Service tax under the category Consulting Engineer . The appellant had entered into four differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Tribunal in the said proceeding as to whether the supply of drawings and designs is to be treated as supply of goods leviable to Customs duty; or supply of consulting engineering services chargeable to Service tax under Finance Act. We find that the reason advanced by the ld. Commissioner in not examining the said Bill of Entry in its proper perspective, that is whether designs drawings are assessed as goods or otherwise under the Customs Act and pertaining to the Agreements in dispute, is not in conformity with the observation/direction of this Tribunal vide its Order No. A-58/KOL/2010, dated 4-2-2010 [2010 (18) S.T.R. 632 (Tribunal)] and accordingly not sustainable in law. 7.4 The ld. Advocate appearing for the appellants drew our attention to the said Bill of Entry bearing No. annexed at Page 328 of the Paper Book. In the said Bill of entry against the column description of the goods it is mentioned as designs and drawings and the total invoice value is reflected as J.YEN 211,200,000 (Rs. 8.86 crores) which conforms with the amount shown in the invoices raised by the appellants on M/s. TISCO. Besides, the said Bill of Entry refers to Invoice No. SPM-SYC-FY dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any of the statutory provisions and reading the two Acts together there can be no manner of doubt that what has been imported into India by the appellants, through the courier or otherwise, from their technical collaborators were goods even though the tangible articles so imported contained information or knowledge for use by the appellants. 28. In view of the clear provisions of the Customs Act and the Tariff Act, which have been referred to hereinabove, whenever any goods or movables or tangible articles are imported into this country customs duty is payable. For the purpose of attracting levy it would be immaterial as to what are the types of goods imported or what is contained in them or recorded thereon. The contents will be relevant for the purpose of valuation. Therefore the decisions of this Court relating to the levy of sales tax in cases of works contracts will have no application here. 7.7 The ld. Spl. Counsel argued that even if the designs and drawing charges are treated as goods and subjected Customs duty, the same also could be assessed to Service tax. In this connection, he has referred to the judgment of the Apex Court in the case of Tamil Nadu Kalyana M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the designs and drawings which were imported and assessed as goods , cannot be subjected to Service tax, hence, no Service tax is chargeable on that part of the contract relating to Contract No. CRMP/CON/SPM/03 dated 16-7-1998 attributing towards the value of designs and drawings. We also agree with the ld. Advocate that the value of drawings and designs procured indigenously also stood on the same footing being assessable to Central Excise duty under Chapter 49 of the Central Excise Tariff Act, 1985 and accordingly be treated as goods , hence cannot be subjected to Service tax. 7.9 Besides, the supply of designs and drawings to M/s. TISCO the other services rendered by the appellant as mentioned in the Agreement dated 16-7-1998 are: supervision of detailed engineering, design and drawing originating in India is valued at J.YEN 15,11,400, supervision of manufacture of indigenous equipment at Indian works erection valued J.YEN 55,85,8900 and start-up commissioning services valued at J.YEN 35,671700. It is vehemently argued by the appellant that these services are not covered under the scope of the definition of Consulting Engineer as was in force during the relevant pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay interest, as per the provisions of Section 75 of the Finance Act, 1994 (32 of 1994) . 7.12 The ld. Advocate has referred to the judgment of Hon ble Bombay High Court in the case of Indian Ship Owners Association reported in 2009 (13) S.T.R. 235 (Bom.) which has been upheld by the Hon ble Supreme Court reported as Union of India v. Indian National Shipowners - 2010 (17) S.T.R. J57 (S.C.). The Hon ble High Court in the said case had declared Rule 2(l)(d)(iv) of the Service Tax Rules, 1994 as invalid in absence of any statutory support, which came into existence in the form of Sec. 66A only w.e.f. 18-4-2006. He has further argued that mere presence of Project Office or liaison Office in India would not make any difference as the same cannot be treated as a permanent office for charging the foreign company under the Finance Act, 1994. He has referred to the judgment of the Tribunal in the case of M/s. Foster Wheeler Energy Ltd. v. CCE C, Vadodara-II [2007 (7) S.T.R. 443 (Tri. - Ahmd.)], The decision of Hon ble High Court of Karnataka in the case of Commissioner of Service Tax, Bangalore v. Araco Corporation reported in 2010 (19) S.T.R. 169 (Kar.), the judgment of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. 7.16 We also find that the Hon ble Karnataka High Court in the case of Commissioner of Service Tax, Bangalore v. Araco Corporation reported in 2010 (19) S.T.R. 169 (Kar.) has also, inter alia, held that the service provided by a foreign company to an Indian company, cannot be subjected Service tax levy during November, 1998 to December, 2000, the period involved in that case as the charging section levying Service tax applicable to such circumstances had come into force w.e.f. 18-4-2005. Their Lordships have observed as under : 6. Having heard the counsel for the parties, we have to consider the substantial question of law framed in this appeal as hereunder : Admittedly, assessee is a foreign company. Even if the arguments advanced by Mr. Shashikantha is accepted, sub-section (31) of Sec. 65 of the Act would apply to the services rendered by an Indian as a consulting engineer. In the present case, the dispute is in regard to November, 1998 to December, 2000. As on November, 1998, the word company or Firm was not included under the definition of sub-section (31) of Sec. 65 of the Act. Therefore, the contention of Mr. Shashikantha cannot be accepted even if it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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