Custom, Excise & Service Tax Tribunal
M/S. Suzlon Infrastructure vs Commissioner Of Central Excise, ... on 14 February, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI .
APPEAL NO. ST/6/08 (Arising out of Order-in- Original No.18/P-III/STC/COMMR/2007 dtd. 22/11/2007 passed by the Commissioner of Central Excise, Pune.III ) For approval and signature:
Honble Mr. Ashok Jindal, Member(Judicial) Honble Mr.Sahab Singh, Member(Technical) ============================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
============================================================= M/s. Suzlon Infrastructure :
Appellants VS Commissioner of Central Excise, Pune.III Respondent Appearance Shri V.Sridharan, Advocate for Appellants Shri K.M.Mondal, Spl.counsel for Respondent CORAM:
Mr.Ashok Jindal, Member(Judicial) Mr.Sahab Singh, Member(Technical) Date of hearing: 17/08/2011 Date of decision:14/02/2012 ORDER NO.
Per : Sahab Singh 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.
2. Background of the case.
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, interalia, in erection, commissioning or installation of windmills or wind turbine generators for its customers on contract basis. The Wind Turbine Generators (in short WTG) are manufactured and supplied by M/s. SEL. It had taken Service Tax Registration for installation & commissioning services on 18.7.2003 which was subsequently amended to endorse other services also.
2.1 Based on intelligence that M/s. SIL was indulging in evasion of service tax under the category of Erection, Commissioning or Installation service as defined in Sec,65(39a) of the Finance Act, 1994, the officers of Directorate General of Central Excise Intelligence (DGCEI), New Delhi conducted investigation into the matter. In the course of investigation, the officers examined the relevant records and recorded statements of some of the functionaries of the appellant company. In his statement dated 27.10.2005, Shri Bipin Shah, General Manager had, interalia, stated that their company is engaged in project execution work comprising civil construction work, erection installation and commissioning of WTG on exclusive basis to the customers of M/s. SEL as per Agreement dated 11.6.2005 entered into between M/s. SEL and the appellant company.
2.2 Similarly, in his statement dated 7.11.05 Shri Harish H.Mehta, Director of the appellant company had, interalia, stated that M/s. SIL is engaged in developing wind farm related infrastructure, project execution covering civil work, electrical work, assembly /erection and commissioning of the windmill exclusively for M/s. SEL or its clients. As soon as a client is identified by M/s. SEL and order is confirmed for sale of WTG, the customer is introduced to their company and thereafter, they finalise the contract for erection, installation and commissioning of the WTG with the customer as per mutually agreed terms and conditions. He also stated that the complete plant, machinery and equipment of the WTG are supplied by M/s. SEL and M/s. SIL is not supplying plant, machinery and equipment except electricals required for the project.
2.3 On examination of the Agreement dated 11.6.2005, between M/s. SEL and M/s. SIL, the officers found that M/s. SIL was required to provide services of erection, commissioning or installation of WTG and establishment of Wind Farm Project exclusively for customers of M/s. SEL. It was also found that M/s. SIL was entered into the contract with its customers for services of erection, commissioning 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. However, in respect of invoices mentioned at Sr.No.(i) and (ii) above, it was availing the benefit under Notification No.19/2003-ST dated 21/8/2003 which provides that in case of a contract involving erection, commissioning or installation services along with the supply of plant, machinery or equipment, service tax will be payable only on 33% of the gross amount charged by the service provider from its customers for erection, commissioning or installation and supply of plant, machinery and equipment, 2.6 Since M/s. SIL was providing only the services of erection, commissioning or installation of WTGs, it appeared that it was not eligible to the benefit of Notification No.19/2003-ST dated 21.8.2003. M/s. SIL, was, therefore, served with a show-cause notice dated 28.8.2006 demanding service tax of Rs. 22,04,53,114/- and Education Cess of Rs. 44,09,131/- for the period 10.9.04 to 30.9.2005. The notice also proposed to impose penalty on it under Sec.76 for contravention of provisions of Section 68 and penalty under Section 78 of Chapter V of the Finance Act, 1994 for evasion of service tax by wilful suppression of facts. The notice also demanded interest on the service tax not paid during the period 10.9.2004 to 30.9.2005 under the provisions of Section 75 of the Finance Act, 1994.
2.7. M/s. SIL contested the notice by its reply dated 24.11.2006, inter alia, contending that the contract of electrical work is distinct and separate from the contract of erection of tower and civil work. Hence it is entitled to the benefit of Notification No.19/2003 dated 21.8.2003.
2.8. After hearing the appellant and considering the submissions, both written and oral, the Commissioner vide his order dated 22.11.2007, confirmed the service tax including Education Cess amounting to Rs. 22,48,62,245/- under the category of erection, installation and commissioning service. The Commissioner also ordered adjustment of Rs. 8,55,15,594/- already paid against its service tax liability. The Commissioner also ordered adjustment of Rs. 2,90,480/- already paid by M/s. SIL towards interest. In addition, the Commissioner also imposed a penalty @ of Rs. 100/- per day from the date it is payable till the date it is paid under Section 76 of the Act. The Commissioner also imposed a penalty of Rs. 22,48,62,245/- under Section 78 of the Finance Act, 1994. Aggrieved by this order, the appellant has filed this appeal.
3. We have heard Shri V.Sridharan, Sr.Advocate for the appellant and Shri K.M.Mondal, ld.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 construction service and that the sub-contractor has paid service tax of 33% of the gross amount charged from the appellant by availing the benefit of Notification No.15/2004-ST dated 10.9.2004 as amended. Similarly, electrical work has been done by a sub-contractor who is registered under the category of Erection, Commissioning or Installation service and has discharged service tax on the entire gross amount charged from the appellant without claiming any abatement under Notification No.19/2003ST dated 21.8.2003 as amended. Hence the appellant has claimed benefit of Notification No.19/2003 ST dated 21.8.2003 as amended.
4.3 The Ld.Sr.Advocate finally limited his submission to supply and installation of electrical equipments. He contented that erection, commissioning or installation of electrical equipments is a separate activity having no relation to erection, commissioning or installation of windmill or WTGs. In this connection, he relied upon the decisions of the Honble Supreme Court in the case of Nicco Corporation Ltd. vs. CCE, Kolkotta -2006(203)ELT 362 (S.C.), Skytone Electricals (India) Ltd. vs. Commissioner -2008(225)ELT A 97(S.C) holding that wires and cables are not parts of windmill.
4.4 On limitation, he submitted that the present case involves a pure question of interpretation of law and that the appellant was under bona fide belief that the activity of civil work and electrical work are distinct and separate from the activity of erection, commissioning or installation of windmill. Hence, in the facts of the case, the extended period of limitation could not be invoked.
5. Supporting the contention of the Commissioner, the Ld.Consultant for the Revenue, submitted that it is a case of composite contract for erection, commissioning and installation of Wind Farm Project, in terms of the Agreement dated 11.6.2005 between M/s. SEL and the appellant and in terms of various work orders placed on the appellant by its customers, it is quite clear that the appellant has provided composite service of erection, commissioning or installation of windmills or WTGs. He submitted that it is a common knowledge that without civil foundation, erection of tower is not possible. It is an integral part of erection and installation of the windmill. Similarly, without electrical installation, commissioning of windmill is not possible inasmuch as electricity 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 appellants claim that civil foundation and electrical installation are separate activities is not acceptable. Consequently, the appellants 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 appellants 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 a case of bona fide belief. The appellant is guilty of suppression of facts. It had not declared the correct value of taxable services in ST.3 returns filed with the department. It had suppressed the fact from the department that it had availed the benefit of Notification No.19/03 ST dated 21.8.03 although it did not supply WTGs to its customers. Therefore, the extended period of limitation has been correctly invoked in this case. In his submission, the appellant has no case both on merit as well as on limitation. He, therefore prayed for dismissal of the appeal.
6. We have carefully considered the submissions of both sides. We have also examined the relevant records including the impugned order and the written submission filed earlier by both sides.
7. We find that the following issues arise for our consideration:-
I) Whether the appellants contracts with its customers are composite contract for erection, commissioning or installation of Wind Farm Project of which electrical installation is a part, as contended by the Revenue or the electrical work is a separate activity distinct from Wind Farm Project, as contended by the appellant ; (II) Whether the appellant is eligible for the benefit of Notification No.19/2003 ST dated 21.8.2003 as amended ; and (III) Whether the extended period of limitation under the provisions of Sec.73(1) of the Finance Act, 1994 is applicable to the facts of this case.
8. We record our findings issue-wise herein below:-
9. Issue No.(I) According to the appellant, it had received from each of its customers four separate contract embodied in a single document viz. the Work Order. It would, therefore, be necessary to see the work orders placed on the appellant by its customers. We find that one of the work orders relied upon in the show-cause notice is in respect of M/s. Hercules Hoists Limited dated 18.11.2004 (available at Page No.331-333 of Paper Book.I Vol.III). For the sake of convenience and ready reference we reproduce the entire Work Orders herein below:
9.1 On perusing the Work Order, we find that it is for erection and installation of 2 Nos. of WTGS (1250 KW each) at Dhulia Site in Maharashtra. We also find that in the Work Order indicates Scope of Work which includes the following under the broad heading of A) Civil, B) Electrical, C) Erection & Commissioning, D) Loading & Unloading, E) Temporary road for movement of crane and preparation of crane platform.
9.2 At page 2 of the Work Order, the price per WTG is shown as Rs. 75 lakhs and then price break-up is shown in the tabular form under the Column Description in respect of each item of work. At page 3 of the Work order, we also find that payment schedule had been indicated as follows:-
* Rs. 82.50 lakhs with order * Rs. 40 lakhs on 15.12.2004 (PDC) * Rs. 27.50 lakhs on 15.01.2005 (PDC).
9.3 We have also perused 4 types of related invoices raised by the appellant on its customers ( available at page 335-338 of Paper Book Vol.III). It is seen that description of items of work is same as shown in the price break up at page 2 of the Work Order. 9.4 In view of the factual position, as seen from the Work Order, we are unable to appreciate that the appellant had received 4 separate contracts embodied in a single document. From the Work Order, it is clear that it is a composite contract for erection, commissioning or installation of WTGs. We, therefore, agree with the Revenues contention that by showing 4 separate invoices, it cannot be contended that appellant had executed 4 separate and distinct contracts with its customers. It is clearly a composite contract and the intention of the appellant is quite obvious from the Work Order.
10. According to the Revenue, in terms of Agreement for Services dated 11.6.2005, between M/s. SEL and the appellant, the appellant is required to provide services to M/s. SEL or its customers on an exclusive basis for the purpose of setting up Wind Farm Project. It is, therefore, necessary to examine the said Agreement for Services. We reproduce below some of the clauses relevant for the present purpose:-
A. The company is a public limited company incorporated 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. (underlined and 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 including, without limitation, the following services:
a. development of infrastructure for setting up of wind farm project including construction of evacuation facilities and construction of approach roads; and b. laying of foundation and erection, installation and commissioning of WTG, construction of control rooms, construction for the transformers, construction of evacuation facilities, construction of approach roads; and c. all related electrical work including material.
3. Agreement for Services 3.1. SDL shall provide the Company with such information as it requests from time to time in order to submit proposals to Customers for setting up WTGs.
3.2 SDL hereby undertakes that it shall offer to provide all or any of the Services to Customers, at the instance of the Company. The procedure for which shall be as follows:-
(a) The Company may at any time at its discretion instruct SDL to perform the services for its customers;
(b) The Company shall specify the location, the date by which the services have to be provided to the customer as well as the terms and conditions on which such services shall be provided to the customer in accordance with Clause 4 below;
(c) SDL shall provide such services as specified by the company to the customer(s) on the terms and conditions specified by the Company;
(d) SDL shall provide the services to the customers at the consideration as determined in accordance with Clause 5 below.
3.4 SDL undertakes that it shall at all times ensure that the terms and conditions specified in this Agreement shall be strictly adhered to and shall not be varied or amended in the agreements for services with the customer except with the prior written consent of the company.
4. Provision of Services.
4.1 The provision of services to the customer shall be completed by SDL in a timely manner in accordance with the schedules as agreed to by the customer with the company.
4.2 SDL hereby undertakes and covenants that it shall not provide services to the customer(s) or any other entity, other than as required by the company or without the prior written consent of the company.
7. Undertakings SDL undertakes that:
(a) It shall not in any manner whatsoever impose or seek to impose any onerous term or condition in any agreement for the provision of services with any customer which may (i) be inconsistent 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; (underlined and 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.(underlined and 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 customers in establishment of windfarm project including civil work and installation and commissioning of WTGs and in this endeavour the appellant (M/s. SIL) provides the required services ( as defined in the Agreement ) to the customers of the company. It is quite obvious from Agreement of Services that the appellant has to provide integrated solutions to the customers in wind power generation. From the definition of Services as reproduced above, we note that the services required for the erection, installation and commissioning of the windfarm project , inter alia, include all related electrical work including material. Reading the definition of Services together with the various clauses reproduced above, we have no doubt in our minds that the main object of the Agreement, in so far as the appellant is concerned, is to provide all of the services required for the erection, installation and commissioning of the Windfarm project (WTGs) to the customers. In that process, while carrying out related electrical work, the appellant will also provide material in relation to the electrical work. In our view, the material provided by the appellant in relation to the electrical work is only incidental to the services for erection, installation and commissioning of the Windfarm Project. The contention of the appellant that the electrical work is separate activity distinct from Windfarm Project cannot be accepted as correct. We hold that the electrical installation is a part of Windfarm Project (WTG) inasmuch as without electrical installation, evacuation of electricity from WTG to the State Electricity grid is not possible. It is needless to mention that the establishment of Windfarm Project becomes complete only after commissioning of the WTGs.
10.2 In support of its contention that the electrical installation is distinct and separate from WTGs, the applicant has relied upon two judgments of the Honble Apex Court in the case of (1) Nicco Corporation Ltd. vs. CCE, Calcutta 2006(203)ELT 362(S.C) and (2) Skytone Electricals (India) Ltd. vs. Commissioner 2008 (225) ELT A 97 (S.C) .
10.3 We have gone through the judgments. In both the judgments, the Honble Apex Court has held that wires and cables cannot be considered as parts of Windmill and hence the benefit of Notification No.205/88 C E dated 25.5.88 as amended cannot be extended to the assessee. In our considered view, these 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, Winfdarm Project will remain incomplete. We therefore, hold that the appellants 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.
11. Issue No.II .
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 erection, commissioning or installation of electrical installation to its customers, it has also supplied the material including wires and cables required for the same. Hence it is eligible for the abatement under the aforesaid Notification. For the sake of convenience, we reproduce the Notification itself inserted by Notification No.12/2004 ST dated 10.9.2004.
NOTIFICATION No. 19/2003-S.T., DATED 21-8-2003 In exercise of the powers conferred by section 93 of the Finance act, 1994(32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided to a customer in relation to erection 1 commissioning or installation by a commissioning and installation agency, form so much of the service tax leviable thereon under Section 66 of the said Act, as is in excess of the amount of service tax calculated on a value which is equivalent to thirty-three per cent. of the gross amount charged from the customer under a contract for supplying a plant, machinery or equipment and erection 1 commissioning or installation of the said plant, machinery or equipment, subject to the following conditions, namely:-
(i) the exemption contained in this notification is optional to the commissioning and installation agency; and
(ii) the benefit under this notification shall be allowed only if the commissioning and installation agency has not availed the benefit under the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2003-Service Tax dated the 20th June, 2003, [G.S.R. 503 (E), dated the 20th June, 2003], for the said contract; and 1 [(iii) The benefit under this notification shall be allowed only if no credit of duty paid on capital goods has been taken under the provisions of the Cenvat Credit Rules, 2004] Explanation. For the purposes of this notification, the gross amount charged shall include the value of the plant, machinery, equipment, parts and any other material sold by the commissioning and installation agency, during the course of providing erection 1 commissioning or installation service.
1 (Inserted by Notification NO. 12/2004-ST dated 10.09.2004) 11.1 On a plain reading of the Notification including the explanation appended to it, we find that its benefit could be available only where the service provider 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 hand 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 Revenues 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, OlDC Industrial Estate, Near Water Tank, Dabhel, Daman 396 210 (U.T.) India ST. No. DI-600 dt.26.09.1996 C.S.T. No. DI/CST/371 DT. 26.09.1996 INVOICE To, M/s. Hercules Hoists Limited 110, Minerva Industrial Estate Mulund (West) Mumbai 400080 Delivery Address:
M/s. Hercules Hoists Limited Village : Petle Taluka : Sakri District: Dhule Maharashtra P.O. No.: PO45-00221-A Date : 18/11/2004 Invoice No: SEL/DAMAN/SUPPLY/2004-2005/055 Date: 28.02.2005 Reference No. 7444000055 Sr. No. Description Qty.
Rate Per Unit (Rs.) Value in Rupees 00020 Supply of SUZLON WTG 1.25MW S66 TubTcwr72M Ht {Ex works Daman) Wind Turbine Generator comprising mainly of :
* Nacelle * Hub and Set of 3 Blades * Controller (Micro Processor) * Tower and Hardware 1 47,30,000 47,30,000 Packing, Handling, Loading, Insurance and Transportation Charges for Delivery at your site 825,000 825,000 Supply of Electrical Items Including Transformers up to D.P. structure internal line up to Metering 1,500,000 1,500,000 Total 49,625,000 AGAINST C FORM Amount in Words: RUPEES FOUR CRORS NINETY-SIX LAC TWENTY-FIVE THOUSAND ONLY Mode of Dispatch: By Road Dispatch Particulars From Daman factory lo your sits Insurance : Arranged by us up to site Customer's L.S.T. No. : 400021/S/3293 DTD 21 -08-1998 Customer's C.S.T. No. : 400080/C DTD 01-APR-95 Central Excise Exempted under G.E. (Notification) No. 6/2002-CE did. 01-3-2002 Sr. No. 237. List No 9, Hem No 13 - Wind Operated Electricity Generators and pans thereof, as amended by Notification No 23/2004-CE did. 09-07-2004.
Subject to Daman Jurisdiction only For SUZLON ENERGY LTD.
Authorised Signatory 11.4 Perusing the above invoice, we find that M/s. SEL have not only supplied WTG and its parts, but also electrical items of substantial value. We find that the Commissioner has rejected the appellants claim for the benefit of Notification No.19/2003 dated 21.8.2003 on the ground that the benefit of Notification is applicable only to those cases where under a contract the services provider not only supplies a plant, machinery or equipments but also provides the service of commissioning or installation 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 inseparable parts of Wind Farm Project. It is needless to say that without civil foundation, erection of tower is not possible. Similarly, without electrical installation, commissioning of Wind Mill is not possible inasmuch as electricity generated by WTGs cannot be evacuated from the Wind Mill to the Electricity Board.
11.6 We find that in his findings the Commissioner has observed that the mere issue of 4 different invoices would not make the activities independent of each other. The Agreement for Services specifies the service as services required for erection, installation and commissioning of Windfarm Project. In his findings, he has observed that the entire gamut of the installation commences with construction of the civil foundation and progresses into installation of electrical yard and transmission line for grid connectivity to erection of the windmill to testing and commissioning of the windmills. Thus, each process is dependant on every subsequent process and thus are inherent and inseparable parts of the work of the entire agreement relating to complete erection, installation and commissioning of the WTGs. In short, civil foundation and electrical installation are inseparate part of windfarm project.
11.7 Once it is held that electrical installation is a part of the composite contract for erection, commissioning or installation of WTGs, the appellants claim for the benefit of Notification No.19/2003 ST for electrical installation cannot be accepted only on the basis that it had supplied some electrical materials for electrical installation. We, therefore, hold that the benefit of Notification No.19/2003 ST is not available to the appellant.
12. Issue No.III.
It is contended by the appellant that the show-cause notice dated 2.8.2006 demanded service tax for the period 10.9.2004 to 30.9.2005. Therefore, the period of 10.9.2004 to 31.3.2005 is beyond the normal period of limitation. It is also contended that the appellant was under the bona fide belief that the activities of civil work and electrical work are distinct and separate from the activity of erection, commissioning or installation of wind mills. Hence, the extended period of limitation could not be invoked in this case. The contention of the appellant was contested by the ld.Consultant for the Revenue. He stated that the assessee is working under self-assessment scheme. 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, therefore, of the view that the department has rightly invoked the extended period of limitation.
13. In view of our foregoing findings, we find no merit in the appeal. We, therefore, reject the appeal and confirm the order of the Commissioner.
14. Appeal rejected.
(Pronounced in Court on 14th Feb.,2012) Ashok Jindal Member(Judicial) Sahab Singh Member(Technical) pv 33