Tax v. M/S Suzlon Energy Ltd.

COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX v. M/S SUZLON ENERGY LTD. (Civil Appeal Nos. 11400-11401 of 2018) APRIL 10, 2023 [M. R. SHAH AND KRISHNA MURARI, JJ.] Finance Act, 1994 – ss.65(35b), 65(105)(zzzzd) – “d esign services” – Respondent engaged in manufacture of Wi nd Turbine Generator (WTG), entered into a product development and purc hase agreement with its sister concern in Germany for ma nufacturing WTG in India – Various models of “Engineering Desig n & Drawings” were imported by the respondent for manuf acturing of WTG – If leviable to service tax under the category of “design services” as defined u/s.65(35b) r/w s.65(105)(zzzzd) – Held: Y es – Definition of “design services” is very clear and w ide enough to cover all “design services” – Merely because “Engineer ing Design & Drawings” prepared and supplied by sister company of the respondent were shown as ‘goods’ under the Customs A ct and in the bill of entry, that by itself cannot be a groun d to take such services out of the definition of “design services” u nder the 1994 Act – View taken by the CESTAT that the same activity c annot be taxed as goods and services is absolutely erroneous – Impugned judgment and order passed by the CESTAT setting aside the levy of service tax is quashed and set aside – However, mat ter remitted back to the CESTAT to consider the grounds raised on behal f of the respondent. Tax/Taxation: Aspect theory – Application of – Held: There can be two different taxes/levies under different heads by apply ing the aspect theory – The same activity can be taxed as ‘goods’ and ‘ services’ provided the contract is indivisible and on the aspe ct of services there may be levy of service tax. Sale of goods and a contract of service – Distinction – H eld: There is a distinction between the sale of goods and a contract of service – What is relevant is the intention of the cont racting parties. Disposing of the appeals, the Court HELD: The designs were to be exclusively used by th e respondent in the territory of India and it was a tailormade design. The respondent engaged the sister concern M/s SEG f or the activity of “Engineering Design & Drawings” used in manufacturing of WTG, that was reduced as blue print on pa per and delivered to the respondent on the same medium. Such “designs” were subjected to the service tax even as per the clarification by the Board dated 18.03.2011 on the issue of applicability of indirect taxes on packaged software. Ther efore, as such, the respondent was liable to pay service t ax on the “design services” received from abroad under reverse c harge. M/s SEG was a related unit, i.e. subsidiary of the asse ssee and the amount received for service by M/s SEG from the asse ssee-respondent for the said “Engineering design & drawings” services therefore was liable to service tax under reverse charge in terms of the concept of ‘associated enterprise’. Despite thi s, M/s SEG raised the invoice/bill on the assessee treating it as ‘paper’. However, when the said bill of entry was presented trea ting the same as ‘paper’ for which the duty payable was ‘Nil’. Ther efore, neither any custom duty was paid due to exemption from payment of duty treating it as ‘paper’ nor the service tax was paid . By a detailed judgment and order, the Commissioner held that the respondent was liable to pay the service tax under taxable category ‘“design services”. However, by the impugned judgment and order, the CESTAT has held that the respondent is not liable to pay the service tax under “design services” under th e Finance Act, 1994 mainly on the ground that the custom auth ority considered the same as ‘goods’ and therefore the same a ctivity cannot be taxed as ‘goods’ and ‘services’. The aforesaid vie w is absolutely erroneous. There can be two different ta xes/levies under different heads by applying the aspect theory. The same activity can be taxed as ‘goods’ and ‘services’ pro vided the contract is indivisible and on the aspect of services t here may be levy of service tax. The aforesaid aspect has not a t all been considered by the CESTAT while passing the impugned judgment and order. The definition of “design services” is very c lear and it is wide enough to cover all “design services.” Merely b ecause “Engineering Design & Drawings” prepared and suppli ed by COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE sister company were shown as ‘goods’ under the Custo ms Act and in the bill of entry, by that itself cannot be a ground to take such services out of the definition of “design serv ices” under the Finance Act, 1994. Even otherwise, there is a d istinction between the sale of goods and a contract of service . What is relevant is the intention of the contracting parties an d whether the contracting parties intend transfer of both goods and services, either separately or in an indivisible manner or in a com posite manner. The view taken by the CESTAT that the same acti vity cannot be taxed as goods and services is absolutely e rroneous. The impugned judgment and order passed by the CESTAT setting aside the levy of service tax is unsustainable and the same deserves to be quashed and set aside. [Paras 7-9][335-F-H; 33 6-A-G; 337-A] BSNL v. Union of India (2006) 3 SCC 1 : [2006] 2 SCR 823 – relied on. Sojitz Corporation v. Commissioner of Service Tax, New Delhi 2009 (14) STR 642 (Tri. Delhi); Hindustan Shipyard Ltd. v. State of A.P. (2000) 6 SCC 579 : [2000] 1 Suppl. SCR 592; Associated Cement Companies Ltd. v. Commissioner of Customs (2001) 4 SCC 593 : [2001] 1 SCR 608; Tata Consultancy Services v. State of A.P.

(2005) 1 SCC 308 : [2004] 5 Suppl. SCR 1040 – referred to. Case Law Reference [2006] 2 SCR 823 relied on Para 3.3 [2000] 1 Suppl. SCR 592 referred to Para 4.2 [2001] 1 SCR 608 referred to Para 4.3 [2004] 5 Suppl. SCR 1040 referred to Para 4.5 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 11400-11401 of 2018. From the Judgment and Order dated 02.05.2018 of the Custom Excise Service Tax Appellate Tribunal, West Zonal Bench at Mumbai in AN Nos. 87589 and 87590 of 2013. N. Venkataraman, ASG, Rupesh Kumar, V. Chandra Shekhar Bharthi, Ms. Priyanka Das, Mukesh Kumar Maroria, Advs. for the Appellant. V. Sridharan, Sr. Adv., Ms. Charanya Lakhmikumaran, Sahil Parghi, Vinay Kumar Jain, Ms. Apeksha Mehta, Aditya Bhattacharya, Ms. Monica Kasturi, Advs. for the Respondent. The Judgment of the Court was delivered by

M. R. SHAH, J.

¶1Feeling aggrieved and dissatisfied with the impugned judgment and order dated 02.05.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (hereinafter referred to as the ‘CESTAT’) in Appeal Nos. ST/87589 & 87590/2013, by which the CESTAT has allowed the said appeals preferred by the respondent – M/s Suzlon Energy Limited (hereinafter referred to as the ‘respondent’) and has held that “Engineering Design & Drawings” of various models imported by the respondent for the purpose of manufacturing of Wind Turbine Generator (for short, ‘WTG’) are not leviable to service tax under the category of “Design Services” as defined under Section 65(35b) read with Section 65(105)(zzzzd) of the Finance Act, 1994 during the period June, 2007 to September, 2010, the Revenue has preferred the present appeals.

¶2That the respondent herein was providing various taxa ble services. The respondent was also in the manufacture of WTG . It has three subsidiary companies situated in Germany and Netherlands with whom product development and purchase agreement had been entered into.

2.1 The respondent had entered into an agreement da ted

01.04.2007 (w.e.f. 01.01.2007) with M/s Suzlon Energy GmbH, Germany, a sister concern for the product development and purchase ag reement to be used exclusively for manufacturing of WTG in the terr itory of India. The products were exclusively defined in para 1.10 of t he said agreement.

2.2 The respondent, while importing these designs filed Bill of Entry with the Custom authorities and classified the same as “Paper” under Chapter Sub-heading No. 49119920 of the Customs Tariff and claimed benefit of ‘Nil’ rate of customs duty under Notification No. 021/ COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE 2002 for BCD and Notification No. 020/2006 for CVD. That respondent claimed that since the designs and drawings received by it vis customs route by filing the Bill of Entry were “goods” and not “services”, it was not required to pay the service tax.

2.3 During the course of audit, it was noticed that the respondent had not paid service tax on “Engineering Design & Drawings” of various models, used in the manufacturing of WTG , which was classifiable under the category of “Design Services” for the period from June, 2 007 to September, 2010.

2.4 The appellant herein – Commissioner of Customs, Central Excise and Service Tax, Pune issued a show cause no tice dated

15.12.2001 to the respondent calling upon it to show cause as to why the service tax to the tune of Rs.18,42,99,652/- on the value of taxable services provided by it under the provisions of Section 73 of Chapter V of the Finance Act and cess under Section 85 of Chapter VI of the Finance Act be not demanded. The respondent was also called upon to pay the interest leviable under Section 75 and penalty under Section 76 and 78 of the Finance Act. For the subsequent period , i.e., Oct ober, 2010 to September, 2011, another show cause notice was issued on

20.04.2012 demanding service tax of Rs.3,36,28,515/- on the value of “design service” from M/s SEG and M/s Suzlon Blade Technology, Netherlands.

2.5 Vide Order-in-original dated 25.03.2012, the Commissioner – appellant herein confirmed the demands made in the show cause notices as provider of “design services” taxable under Section 65(105)(zzz zd) and in accordance with the definition of the services in Section 65(35b) of the Finance Act, 1994. The Commissioner also levied interest as well as the penalty.

2.6 Aggrieved by the Order-in-original passed by the Commissioner confirming the demands of service tax and also levying the interest and penalty, the respondent filed appeals before the CESTA T. By the impugned common order, the CESTAT has allowed the said appeals, relying upon its earlier decision in the case of Sojitz Corporation v. Commissioner of Service Tax, New Delhi, reported in 2009 (14) ST R 642 (Tri. Delhi) and has held that the said design and drawings are ‘goods’ and not ‘service’. The CESTAT has also observed and held that the taxation of goods and that of services are mutually and explicitly conceived levies, and therefore the same activity cannot be taxed as goods and as services. Consequently, the CESTAT has set aside the Order-in-original on the ground that “drawing and design” are to be treated as goods and therefore it cannot be treated as service.

2.7 Feeling aggrieved and dissatisfied with the impugned common order passed by the CESTAT, the Revenue has preferred the present appeals.

¶3Shri N. Venkataraman, learned Additional Solicitor General of India appearing on behalf of the Revenue has submitted that the substantial question of law arises for the consideration of this Court is , “whether “Engineering Design & Drawings” of various models imported by the respondent for the purpose of manufacturing of WTG are levia ble to service tax under the category of “Design Services” as defi ned under section 65(35b) r/w section 65(105)(zzzzd) of the Finance Act, 1994 during the period June, 2007 to September, 2010?

3.1 Shri N. Venkataraman, learned ASG has submitted that t he contentions of the respondent that any intellectual property put in a media at all times would only get classified as ‘goods’ and never as ‘services’ may not be the correct statement of law. It is submitt ed that merely because the intellectual property put in a media, it would not per se make them goods. It would depend on whether the contracting parti es have understood it as a transfer or a sale of goods. It is submitted that importation of a set of tailor made or readymade drawings will constitute a sale of goods, whereas if a person engages a painter to draw a picture of his choice and to his specifications and the delivery of the painting, even though on a canvas duly framed, may only constitute to a service, since the painter has engaged his entire intellectual effort in drawing the painting for a particular customer and to his specifications and as he progresses with the painting, the same is for a specific customer.

3.2 It is submitted that this can also happen in the case of “designs & drawings”. It is submitted that a set of tailor made dr awings and designs or readymade drawings and designs would constitute a distinct clause when compared to preparation of drawings and designs under a contract of service for a specific customer to suit his specifications.

3.3 Shri N. Venkataraman, learned ASG has heavily relied upon the decision of this Court in the case of BSNL v. Union of India, reported in (2006) 3 SCC 1 (paras 44 & 45), in support of his submission on the distinction between sale of goods and a contract of service. O n the COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE decision of this Court in the case of BSNL (supra) and the distinction between sale of goods and a contract of service, Shri N. Venkataraman has made the following submissions: a) it held that sale in the conventional sense would mean the Gannon Dunkerly test and, deemed sale involving both goods and services would be limited only to a work contract and food contract; b) It made it clear that Article 366(29A) does not give a license to assume that a transaction is a sale and then to look around for what could be the goods. This would be an incorrect approac h since the expression goods had not been altered by the 46 th amendment and the ingredients of sale continues to have the same definition; c) However, this does not mean that the content of the concepts remain static, and the Courts must move with times; d) It proceeded to hold that Article 366(29A) does not seek to cover hospital services, lawyer services and other profe ssional services, where during the course of rendering such services, there may be a transfer of goods; e) Treatment of a patient in a hospital and administration of pills in the course of a treatment would not tantamount to sale; f)When a doctor writes out and hands over a prescription or a lawyer drafts a document and delivers it to his/her client, strictly speaking, with a payment of fees, consideration does not pa ss from the patient or client to the doctor or lawyer for the documents in both the cases; g) However, these are mere services and do not involve a sale for the purposes of Entry 54 List 2; h) The reason is that ultimately one has to apply the Gannon Dunkerly test. If there is an instrument of contract which may be composite in form, in any case other than the exceptions in Article 366(29A), unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service and impose tax on sale;

i)The test, therefore, for service contracts, other than the two contracts falling under Article 366(29A), would be ‘did the parties have in mine or intend separate rights arising out of the s ale of goods? If there was no such intention, there is no sale even if the contract could be disintegrated.’; and j)The test for deciding whether a contract falls into one category or another is, as what is the substance of the contract othe rwise called, the dominant nature test.

3.4 It is submitted that therefore what is required to be considered is, did the contracting parties intend transfer of both goods and services, either separately or in an indivisible manner or in a composite manner.

3.5 Shri N. Venkataraman, learned ASG has also submitted t he following illustrations in support of his submission that the “Engineering Design & Drawings” of various models imported by the respondent for the purpose of manufacture of WTG are leviable to servic e tax and cannot be taxed as goods:

i) If a contracting parties A and B agree to the purchase of a huge boiler for erection, installation and commission in a factory, the intention of the contracting parties would envisage the sale of a boiler as goods and a rendition of erection, installation and commissioning as services. This contract can be either divisible, indivisible or composite. Whatever may be the nature of the contract, the intending parties have contracted for both the sale of goods and the rendition of service.

ii) A patient is under medical treatment at a hospital and t he doctor had advised for a heart surgery and insertion of a stent. Here again, it involves two elements. The transfer of the stent from the hospital into the body of the patient and the rendition of medical services by the doctor through the hospital. Even though it involves both goods (stends) and services (medical services/hospital services), the contracting parties, namely, the patient and the hospital, do not intend to buy and sell a stent and also a rendition of medical services as 2 items of sale and service. The contract is essentially for the rendition of medical services and in the course of rendition, based on the advice of the doctor, a stent is inserted into the body of the patient. COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE

3.6 Making above submissions, it is prayed to allow the present appeals.

¶4Shri V. Sridharan, learned senior counsel appearing on behalf of the respondent has submitted that the precise question involved in the present appeal is, “whether service tax can be levied on pure s ale (not deemed sale) of customises drawings/designs contained in a medi um prepared as per the specifications given by the customer.”

4.1 It is submitted that as per the settled position of law, supply of goods as per specifications given by the customer is also treated as sale of goods.

4.2 It is submitted that the first question is, whether suppl y of goods as per specifications given by the customer is a contract of sale of goods or merely a contract for work on labour. It is submitted that in the case of Hindustan Shipyard Ltd. v. State of A.P., reported in (2000 ) 6 SCC 579, it is held that if the thing to be delivered has any individual existence before the delivery as the sole property of the party who is to deliver it, then it is a sale. Further, if the bulk of mat erial used in construction belongs to the manufacturer who sells the end product for a price, then it is a strong pointer to the conclusion that the contract is in substance one for the sale of goods and not one for labour.

4.3 Learned senior counsel appearing on behalf of the respondent has heavily relied upon the decision of this Court in the case of Associated Cement Companies Ltd. v. Commissioner of Customs, rep orted in

(2001) 4 SCC 593. It is submitted that in the said decision, this Court has held that any media which contain drawings or designs woul d be regarded as goods under the provisions of the Customs Act. It is observed that these items are movable goods and would be covered by Section 2(22)(e) of the Customs Act. It is observed and held that the fact that the technology or ideas is tailormade would not make any difference.

4.4 It is submitted by Shri V. Sridharan, learned senior couns el appearing on behalf of the respondent that it may be true that the decision of this Court in the case of Associated Cement Companies Ltd. (supra) may not be an authority for the proposition that service tax c annot be levied on pure sale of goods, the said decision is certainly an authority for the proposition that designs on a medium will be tre ated as goods under the natural definition of goods. It is submitted that the said decision is also an authority for the proposition that the amount paid by the importer to the original supplier is nothing but price for sale of such goods.

4.5 Shri V. Sridharan, learned senior counsel has also relied upon the Constitution Bench decision of this Court in the case of Tata Consultancy Services v. State of A.P., reported in (2005) 1 SCC 308. It is submitted that in the said decision, the question was, as to whether canned software soled by the appellants can be termed to be “goods” and as such assessable to sales tax under the Andhra Pradesh G eneral Sales Tax Act, 1957. It is submitted that in the said decision, this Court affirmed the decision in the case of Associated Cement Companies Ltd. (supra) and held that intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes and marketed would become “goods .”

4.6 It is further submitted that the intent of service tax legislation is not to levy service tax on sale of goods. It is submitted that sales tax is levied on sale of goods whereas the service tax is levied on provision of service. It is submitted that therefore a transfer of goods for a price cannot be subject to service tax.

4.7 It is submitted that it is true that different aspects of a transaction can be taxed through separate provisions. The aspect theor y permits taxation of two different aspects or features of a transaction. For instance, in a catering contract, supply of food was subject to value added tax and the service aspect was subject to service tax. However , in the case of BSNL (supra), this Court has observed that the aspect theory does not allow the value of goods to be included in services and vice versa. Reliance is placed on the observations made in para 88 of the said judgment.

4.8 It is further submitted by Shri V. Sridharan, learned seni or counsel appearing on behalf of the respondent that before the CESTAT, the respondent raised a specific ground that the services (if any) rendered by a foreign entity will not fall within the purview of “design services”. The respondent also raised a specific ground that the extended period of limitation cannot be invoked. However, though the said submissions have been noted be the CESTAT, the CESTAT has not dealt with those contentions and therefore it is prayed that the matter may be remanded to the CESTAT to decide all these questions. COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE

¶5We have heard learned counsel for the respective partie s at length. The issue to be decided in the present appeals is “whether activity of import of “Engineering Design & Drawings” from the sister companies by the notice during the period under dispute i.e., June, 2007 to September, 2010 is classifiable under taxable category “design services” under section 65(35b) read with Section 65(105)(zzzzd) of the Finance Act, 1994 .

5.1 While considering the aforesaid issue, the definition of “design services” under the Finance Act, 1994, as it stood during the impugned period, is required to be considered, which reads as under: SECTION 65. Definitions. -In this chapter, unless the context otherwise requires, ……….

(36b) design services” includes services provided in relati on to designing of furniture, consumer products, industrial products, packages, logos, graphics, websites and corporate identity designing and production of three dimensional models: ……….

(105) (zzzzd) “taxable service” means any service provided or to be provided, (zzzzd) to any person, by any other person in relation to desi gn services, but does not include service provided by-

(i) an interior decorator referred to in sub-clause (q); and

(ii) a fashion designer in relation to fashion designing referred to in sub-clause (zv): and the term “service provider” shall be construed accordingly.” Thus, it can be seen that the definition of “design services ” is a wide and conclusive one, specifically excluding only fashion design and interior designing, which were already taxable under separat e taxable category.

¶6In the present case, the respondent was engaged in manufacture of Wind Turbine Generator (WTG). It entered into ‘product development and purchase agreement’ with three of its sister compa nies. Relevant clauses of the agreement, more particularly which defined the ‘product’ read as under:

1.10.1 ‘Design and Development’ of all models of rated capacity geared WTG together with all related and pertinent components and therein required;

1.10.2 ‘Design and Development’ of ‘Suzlon Flexislip System’ together with all related and pertinent components and therein required;

1.10.3 All and any products that is developed by M/s S EG conceived (whether or not actually conceived during regular business hours), discovered, or made by M/s SEG and its agents and employees during the course of performing its obligations under the Agreement;

1.10.4 Documentation including material and documents containing studies planning activities, manufacturing process details in respect of above.

1.10.5 All modifications made to the above, from time to tim e, and all other improvements developed and incorporated within the above.

1.10.6 Intellectual property and intellectual property r ights relating thereto in so far it belongs to German Inventions Law.

¶7At this stage, it is required to be noted that the said d esigns were to be exclusively used by the respondent in the territory of India and it was a tailormade design. The respondent engaged the sister concern M/s SEG for the activity of “Engineering Design & Drawings” used in manufacturing of WTG, that was reduced as blue print on pap er and delivered to the respondent on the same medium. Such “designs” were subjected to the service tax even as per the clarificati on by the Board dated 18.03.2011 on the issue of applicability of indirect taxes on packaged software. Therefore, as such, the respondent was liable to p ay service tax on the “design services” received from abroad under reverse charge. It was also found that M/s SEG was a related unit, i.e., subsidiary of the assessee and the amount received for service by M/s SEG fr om the assessee-respondent for the said “Engineering design & drawings” COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE services therefore was liable to service tax under rever se charge in terms of the concept of ‘associated enterprise’.

¶8Despite the above, M/s SEG raised the invoice/bill on the assessee treating it as ‘paper’. However, when the said bill of entry was presented treating the same as ‘paper’ for which the d uty payable was ‘Nil’. Therefore, neither any custom duty was paid due to exemption from payment of duty treating it as ‘paper’ nor the service tax was paid. By a detailed judgment and order, the Commissioner hel d that the respondent was liable to pay the service tax under taxable category ‘“design services”. However, by the impugned judgment and order, the CESTAT has held that the respondent is not liable to pay the service tax under “design services” under the Finance Act, 1994 mainly on the ground that the custom authority considered the same as ‘goods’ and therefore the same activity cannot be taxed as ‘goods’ and ‘services’. The aforesaid view is absolutely erroneous. As observed and held by this Court in the case of BSNL (supra), there can be two different taxes/levies under different heads by applying the aspect theory. As per the settled position of law now, the same activity can be taxed as ‘goods’ and ‘services’ provided the contract is indivisible and on the aspect of serv ices there may be levy of service tax. The aforesaid aspect has not at all been considered by the CESTAT while passing the impugned judgment and order. As observed hereinabove, the definition of “design services” is very clear and it is wide enough to cover all “design services.” Merely because “Engineering Design & Drawings” prepared and sup plied by sister company were shown as ‘goods’ under the Customs Act and in the bill of entry, by that itself cannot be a ground to take such services out of the definition of “design services” under the Finance Act, 1994.

¶9Even otherwise, as observed by this Court in the case of BSNL (supra), there is a distinction between the sale of goods and a contract of service. What is relevant is the intention of the contr acting parties and whether the contracting parties intend transfer of both goods and services, either separately or in an indivisible manner or in a composite manner. The issue is squarely covered by the decision of this Court in the case of BSNL(supra) against the assessee and in favour of the revenue. Therefore, the view taken by the CESTAT that the same activity cannot be taxed as goods and services is absolutely erroneous. Nothing further has been discussed by the CESTAT, more particularly on the findings recorded by the Commissioner recorded from para 20 onwards. Under the circumstances, the impugned judgment and order passed by the CESTAT setting aside the levy of service tax is uns ustainable and the same deserves to be quashed and set aside. However, at the same time, as other grounds raised before the CESTAT, namely, “whether the services (if any) rendered by a foreign entity will or will not fall within the purview of “design ser vices” and invocation of extended period of limitation have not been considered by the CESTAT and therefore learned counsel for the respondent is justified in praying to remand the matter to CESTAT to decide the aforesaid two grounds.

¶10In view of the above and for the reasons stated above, t he impugned judgment and order passed by the CESTAT holding that the respondent is not liable to pay service tax as “design services” on importing various models of “Engineering Design & Drawings” for the purpose of manufacturing of Wind Turbine Generator (WTG), as defined under Section 65(35b) r/w section 65(105)(zzzzd) of the Financ e Act, 1994 is hereby quashed and set aside. However, the matter is remitted back to the CESTAT to consider the grounds raised on behalf of the respondent, namely, whether the services (if any) rendered by a foreign entity will not fall within the purview of “design services” and that the department was not justified in invoking the extended period of limitation. It is made clear that the matter is remitted back to CESTAT to consider the aforesaid two grounds and none other. Insofar as the issue of levy of service tax on the “Engineering Design & Drawings” is concerned, the same is decided in favour of the revenue and against the ass essee.

¶11The instant appeals stand disposed of in terms of the above. However, in the facts and circumstances of the case, there shall be no order as to costs. Divya Pandey Appeals disposed of. (Assisted by : Abhishek Pratap Singh and Roopanshi Virang, LCRAs) COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE