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TMI Blog2004 (12) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... d a penalty of Rs. 200/- for every day during the period of default from 26-7-2001 until the service tax levied is fully paid un der Section 76 of Finance Act, 1994. (vi) Imposed a penalty of Rs. 1,000/- under Section 77 of Finance Act, 1994. (vii) Imposed a penalty of Rs. 6,34,00,000/- under Section 78 of Finance Act, 1994. 2. Facts of the case in brief are that the appellants is a consortium member/leader for the contract relating to the receipt, unloading, storage and regassification of LNG and send out of the regassified LNG entered into between Petronet LNG Ltd. and the consortium member. 3. The appellants, as part of a consortium, comprising of M/s. Ballast Nedam International B.V. Plot No. 7/A, Dahej Main Road, Rahlyad Chockdi, Tal. Vagra, Dist. Bharuch. M/s. Itochu Corporation, M/s. Mitsui and Co. Ltd. and M/s Toyo. Engineering Corporation had bid for the construction of the LNG Terminal to be constructed at Dahej. In this case, the consortium was awarded a lump sum Turnkey Contract for engineering, procurement, construction and commissioning (hereinafter referred to as the EPC Contract) dated January 19, 2001 and the Supplemental Agreement dated March 19, 2001 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract entered into by them with M/s. Petronet LNG is work contract with turnkey basis and the matter is fully covered by the decision of Tribunal in the case of M/s Daelim Indus. Co. Ltd. v. CCE, Vadodara reported vide, 2003 (155) E.L.T. 457 (Tn. - Delhi) and the same has been upheld by the Hon'ble Apex Court. It has been submitted that several clause of the contract mentioned in the Daelim case are similar to the project in the contract entered in by them. They have also relied upon the Order-in-Appeal, dated 15-9- 2003. They vide their letter, dated 23-11-2004 submitted additional submissions along with copy of contract. 5. I have carefully gone through the case records and considered the submissions made by the appellants. 6. The perusal of records, show that the Adjudicating Authority under impugned order after going through the clauses of contract held that the services provided by the appellants is clearly and explicitly categorised under Consulting Engineering Services since (i) the entire project has been clearly bifurcated and each and every stage of the project has been distributed between each member of the consortium (ii) the owner was required to accord approval t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of LNG receiving, storage and regasiflcation terminal at Dahej, Gujarat ('site') (hereinafter referred to as the Contract'). A supplemental agreement of the Contract was executed on 19 March 2001. Page 2 - Clause E - Preamble to the Contract reads as under: Subsequent to the Letter of Acceptance, Owner and Contractor have entered into this Contract providing for the design, engineering, procurement, erection, construction, testing, commissioning and turning over of the facilities, all on a turnkey basis, all as more fully described in and subject to the terms of this contract. Page 4 - Clause 2.1 of the Contract - The Work reads as under: The Parties acknowledge and agree that this Contract is a lump-sum firm fixed price time certain turnkey contract and contractor's obligation to provide, furnish and perform its services, activities and work under this Contract includes Contractor providing owner with the operating and completed Facilities, complete in every detail within, the time and for the purposes specified in this Contract and to do and furnish Owner everything necessary in connection herewith. Page 35 - Clause 13.1 of the Contract - Contract Price reads as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, Lender's consultants and advisers, and Owner's personnel. M/s. Foster Wheeler Energy Limited, I is the Owner's Project Management Consultant. Page 9 - Clause 4.2.1. of the Contract - Design and Engineering reads as under: Contractor shall cause the design and engineering of the facilities to conform with the design criteria set forth in the Scope of Work (Exhibit A) and Technical Documents. Page 30 - Clause 10.3 of the Contract - Approvals reads as under: Owner shall review and where appropriate, approve all Drawings and Documents submitted by Contractor pursuant to and within the time periods provided in Exhibit H (General Project Requirements and Procedures). In the event Owner does not disapprove or approve any Drawing and Document with the specified time period in Exhibit H (General Project Requirements and Procedures), Owner shall be deemed to have approved such Drawing and Document. Page 52 - Clause 16.1 of the Contract - Inspection, Examination and Testing reads as under: All design, engineering, Equipment and Materials and workmanship supplied by Contractor or for which Contractor is responsible shall be subject during normal business hours to inspection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied or (b) reject the request giving its reasons where appropriate, and specifying the work required to be done by contractor to enable the conditions set out in clause 17.4.1 to be met. Page 5 - Exhibit A of the Contract - Scope of Work - A.1 Brief Scope of Work reads as under: Owner has developed substantial intention, basic studies, specifications and drawing in form of documents cons ting the Technical Documents (Part 2), which are part of the Contract. Such Technical Documents (Part 2) are provided by Owner to Contractor only as a basis for allowing Contractor to develop from there his own engineering activities and further activities so as to execute the Work on a turnkey basis and to furnish complete, adequate, safe, easily operable and fully maintainable Facilities. Page 11 - Exhibit A of the Contract - Scope of Work - D.4 Drawings and Documents reads as under: The Contractor shall prepare all drawings and documents, design, spec and any other information in drawings and documents form, required by the Owner and in accordance with job requirements, prior to construction is sue. Preliminary drawings shall not be used for procurement or construction purpose. Contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants and others with M/s. Petronet LNG Ltd., it is seen that it is a composite Contract in the nature of execution of the work contract on turnkey basis on fix lump sum price. 10. 1 have also gone through the relevant pages of the following Books wherein turnkey project/contract has been explained. (1) S.B. Sarkar's - Words and Phrases of Excise Customs - 3rd Edition: Turnkey (A contract for) a job in which the contractor is to complete the en tire operation, leaving the building, a plant etc ready for use - designed and ready for immediate use by the purchaser. (II) Black's Law Dictionary - Seventh Edition - Bryan A Garner-Editor in Chief: Engineering, procurement and construction contract - A fixed price, schedule - intensive construction contract - typically used in the construction of single-purpose projects, such as energy plants - in which the contractor agrees to a wide variety of responsibilities, including the duties to provide for the design, engineering, procurement, and construction of the facility; to prepare start-up procedures; to conduct performance tests; to create operating manuals; and to train people to operate the facility- Abbr. EPC contract- a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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