COMMISSIONER OF CENTRAL EXCISE, VAPI Vs. SAIF ELECTRONICS

JUDGEMENT

(1.) THE respondents are manufacturers of electrical capacitors and switchgears falling under Chapter 85 of the schedule to the Central Excise Tariff Act. On the basis of the income shown by them under the head of Consultation fees, a show cause notice was issued demanding service tax under the category of Consulting engineering service for the period from 7 -7 -1997 to 31 -3 -2001. The show cause notice culminated in confirmation of demand of Rs. 13,32,477/ - and penalties under various sections of Finance Act, 1994 and on the appeal filed by the respondents, the Commissioner(Appeals) set aside the order confirming the demand and imposing penalties on the ground of limitation. The Revenue is in appeal against this order.

(2.) HEARD both the sides. The Ld. DR on behalf of the Revenue submitted that the contention of the respondents that they were not an engineering firm and they were only providing services to the customers when a request was made for electricity evaluation and verifying the power usage of electrical installation is not correct. He submitted that the respondents are engaged in manufacture of sophisticated electrical items like electrical capacitors, switchgears which are technically sophisticated and require high engineering skills and therefore they come under the category of engineering firm. He also cited the decision of the Tribunal in the case of M/s. Nokia (I) Pvt. Ltd. [2006 (1) S.T.R. 233 (Tri. -Del.)] in support of his contention that consulting engineering service includes not only engineering service but also services in the area of telecommunications, software etc. It is his contention that the consultative services provided by the appellants therefore is covered by the consulting engineering service. He also submits that the engineering firm is covered by the service providers and nowhere it has been said that when engineering firm provides a service it should be provided by professionally qualified engineers. He also submits that by not submitting the returns and intimating the Department about such services being provided by them on the request of customers, the suppression has been rightly invoked.

(3.) ON the other hand Ld. Advocate on behalf of the respondents submits that the service was provided by semi -skilled employees of the company and is clearly not covered by the consulting engineering service. He relies on the decision in the case of M/s. Shakumbari Sugar and Allied Ind. Ltd. [2006 (4) S.T.R. 567 = 2006 (76) RLT 882 (CESTAT -Del.)] and also points out that in this case M/s. Nokia (I) Pvt. Ltd. case was distinguished. He also relies on Trade Notice issued by the New Delhi Commissionerate in support of his arguments that the respondents do not come under the category of consulting engineers. He also relies upon the orders of the Commissioner (Appeals) wherein he has set aside the demand on the ground of limitation. He submits that in the show cause notice, the Department never explained the type of service being rendered by the respondents and why it is liable to service tax and thereby the Department has not fulfilled the basic requirement of the law that show cause notice should explain how and why the assessee is liable to pay. Further he also pointed out that Section 73 of Finance Act, 1994 was not invoked in the show cause notice and suppression was also not specifically invoked. He submitted that there are several decisions of the Tribunal wherein it has been held that if suppression is not invoked in the show cause notice, extended period cannot be applied.