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September 2015

2015 (39) STR 252 (Tri.-Del.) Bharat Electronics Ltd. vs. Commissioner of C. Ex., Ghaziabad

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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Central Excise duty cannot be levied on services taxable under Service tax laws.

Facts:
The appellant manufactured a minor part which was supplied to its clients with other imported goods under two divisible contracts. Excise duty was paid on the minor part, however, department demanded excise duty on services forming part of these contracts. It was argued that service component was already under adjudication under Finance Act, 1994 and the services should be automatically excluded from Central Excise laws in the present adjudication, specifically when the items were outside the purview of Central Excise. Since, Central Excise department was not aware of adjudication proceedings initiated by service tax authorities, they had requested for extension of time to verify the fact. However, even after a long time span, department did not provide any reply to the Tribunal.

Held:
The Tribunal examined appellant’s submissions and observed that the divisible contracts were executed specifically demarcating provision of services. In view of separate contracts for supply and service and laws relating to taxation of goods and services, it was held that services cannot be taxed under Central Excise laws.

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