DAELIM INDUSTRIAL CO. Vs. CCE

JUDGEMENT

(1.) M/s Indian Oil Corporation Ltd. awarded a contract to M/s Daelim Industrial Co. Ltd. (appellant) for construction of a diesel hydro -desulphurisation plant and utilities / off -site at Gujarat refineries. The purpose of the plant was to treat diesel so as to reduce the sulphur content in diesel from about 0.75 to 0.25 in order to meet the pollution standard stipulated by the Hon'ble Supreme Court of India. The contract was on lump sum turn -key basis. The lump sum price had an India rupee payment of about Rs 184 crores US payment of about 2.2 crores. The contract involved "residual process design, detailed engineering, procurement, supply, construction, fabrication, erection, installation, testing commissioning and mechanical guarantee".

(2.) A show -cause notice dated 16.04.2001 was issued by the Additional Commissioner, Central Excise, Vadodra holding that the appellant was liable to pay service tax on residual process design and detailed engineering, "commissioning of plant" applicable to "consulting engineers". The appellant contested the proposal contending that theirs was a construction contract and they have not rendered any engineering consultancy services. They failed. The Additional Commissioner of Central Excise, Vadodra passed his Order -in -original dated 1.3.2001 upholding duty demand of about Rs. 81 lakhs. Certain penalties were also imposed. The matter was taken up in the Appeal before the Commissioner (Appeals), Vadodara with no different results. Learned Commissioner (Appeals) held that engineering consultancy service was involved in regard to residual process design and detailed engineering, commissioning of the plant. He also held that service tax was imposable whether engineering consultancy was rendered directly or indirectly to the client. The present appeal is directed against that order of the Commissioner (Appeals).

(3.) We have perused the records and have greatly been assisted by the learned Counsel, Shri P K Sahu appearing for the appellant and the learned SDR, Shri S M Tata appearing for revenue.