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TMI Blog2021 (2) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be sold to the same overseas buyers. The prime activity of the appellants is manufacturing and as per the agreement/contract/ purchase order, they have to manufacture goods only as per the specification of their buyers and the design of the said goods is also very specific. To meet out the requirements of their buyer they first manufacture the tooling kit for the production of goods and they charge the manufacturing cost of the tooling kit in the head of Die design preparation charges . From the records it appears that, the appellants themselves not design the said tooling kit but they only manufacture the same on the basis of drawings provided by their customers. Further, it is found that the period of demand starts from 2014-15 onwards, whereas, prior to 01.07.2012 the classification was being done as per the provisions of Section 65A read with Section 65(105} of the Finance Act, 1994. However, the earlier method of classification was done away w.e.f, 01.07.2012 and negative list regime has came in to existence wherein service has been defined as any activity for consideration (Section 65B of the Act) and there remains no categorization of service. All the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, it was observed that, the appellant were engaged in providing taxable services by way of designing and Preparing dies, tools and molds {in short tooling kit) based on the orders/ specifications of their overseas clients and once the tooling kits were approved by the overseas buyers the same were reserved for them for use of repetitive Service in relation to subsequent orders for the manufacture p',desireg forgings. It suggested that the tooling kits as designed by the appellants are not physically delivered to the overseas buyers rather it is kept with them for delivery of service so that the benefit of service is consumed as per requirement of the service recipients. Said services fall under the ambit of Design Service , However, the appellants have failed to pay appropriate service tax on the amount received in lieu of providing these services. 3. Vide the impugned Order-in-Original as mentioned above, proposal of demand along with interest as mentioned above were confirmed, Penalties as proposed were also confirmed upon the appellants, 4. Being aggrieved, the appellant preferred the instant appeal. 5. The appellant in their grounds of appeal have stated inter- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich deals with any process amounting to manufacture or production of goods is not allowed. It was also stated by the LD adjudicator that since the activity of the appellant falls under the category of Declared Services under 66E(d) of the FA 1994, therefore their claim was not valid and unsustainable. Section 66D of FA 1994 lays down the negative list of services. The negative list provides a list of services on which no service tax shall be levied. During the relevant period, clause (O of Section 66D of FA'1994 dealt with any process amounting to manufacture or production of goods . The appellant submits that the activity undertaken by the appellant amounts to manufacture and thus was covered under clause (f) of Section 66D of FA'1994. Hence no service tax is payable. h. The definition of manufacture as per Section 2(F) of Central Excise Act 1944, is an inclusive one. It includes any process incidental or ancillary to the completion of a manufactured product and those activities specified in relation to any goods in the Section or Chapter Note of First Schedule of Tariff Act as amounting to manufacture. When definition of manufacture is provided in C. Excise Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evade payment of or no suppression of facts. n. No penalty is imposable in the instant case as there is no contravention of any provisions of law. For this the they have relied upon some judicial pronouncements. 6. Virtual Personal hearing was held through Webex App on 12.01.2021 at 01.20 PM during which Sri Akash Agrawal, Consultant and Sri Pankaj Dubey, Authorised Representative appeared on behalf of the appellant and stated that the matter is decided by Hon'ble Tribunal in the party's own case also Commissioner (Appeals), Ranchi allowed the case in party's own case and stated that the instant case may also be allowed. 7. Heard the appellant and perused the records, 8. The main issue which requires determination in the instant appeal is whether the impugned activities are classifiable under the taxable Category of Design Service or otherwise. 9. With regard to the contention of the appellant that, the impugned activities cannot be said to be a taxable Service, I find that, it is on records that the designs/ drawings of the die/moulds etc. (tooling for manufacturing final Products) are being provided by the overseas buyers of the appellants and upon m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Put. Ltd. Vs CCE Ghaziabad as reported in 2005{187)DLT244 (Tri-Del). Wherein, the amount received on account of design and development of tooling has been held to be not chargeable to service tax. The relevant portion of the said judgement is as under- 4. We find that as per the provision of the Finance Act, 1994, the consulting engineer means any professionally qualified engineer or engineering firm who either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. No doubt, that the appellant in their balance sheet treated this amount as design and development charges. However, from the facts of the case, we find that the appellants were charging for the design and development of tooling, which were used. in the manufacture of the rubber components of the motor vehicle. The rubber components so manufactured were cleared on the payment of excise duty and the value of rubber components are also included to the cost of these tooling. In these circumstances, we find that the demand confirming in respect of service tax treating the appellant as consulting engineering is not sustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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