Order date – 10 April 2023

Parties – Commissioner of Customs, Central Excise & Service Tax Vs M/s Suzlon Energy Ltd.

Facts –

• The respondent, M/S SUZLON ENERGY LTD., was in the manufacture of Wind Turbine Generator and had entered into an agreement with a sister concern in Germany for product development and purchase.
• The respondent filed Bill of Entry with the Custom authorities and classified the designs and drawings as "Paper" under Chapter Sub-heading No. 49119920 of the Customs Tariff and claimed the benefit of 'Nil' rate of customs duty.
• During the audit, it was noticed that the respondent had not paid service tax on the Engineering Design & Drawings of various models used in the manufacturing of WTG, classifiable under the category of "Design Services."

Issue –

• Whether activity of import of “Engineering Design & Drawings” from the sister companies is classifiable under taxable category “design services”?

Order –

• The Supreme Court observed that the definition of “design services” is wide enough to cover all “design services” and that the activity of “Engineering Design & Drawings” supplied by M/s SEG fell under the definition of “design services”.
• It also noted that the fact that the activity was shown as ‘goods’ under the Customs Act was not a ground to take such services out of the definition of “design services”.
• Therefore, the respondent was liable to pay service tax under “design services” under the Finance Act, 1994.
• The instant appeals stand disposed of. However, in the facts and circumstances of the case, there shall be no order as to costs.