Hii all,
A company has been awarded a contract of executing a pollution control equipment in the premises of buyer.
This company will execute the whole contract by sub-contracting it to 10-12 other sub-contractors for each line of work i.e. civil, mechanical, testing, installation, commissioning etc.
The said work is completely a works contract for the purpose of service tax and VAT (Gujarat State).
However, pollution control equipment falls under definition of "Capital Goods". In execution of said contract, company is buying various excisable goods from sub-contractors which will be directly supplied in the buyer's premises where pollution control equipment is to be executed. Sub-contractors are certainly going to charge excise on raw materials supplied like pipes and other products.
The question here is does execution of pollution control equipment (a capital goods item) amount to manufacture and if yes shall company charge excise duty to buyer?
Can company claim that the status of the sub-contractors are that of manufacturers only and excise duty charged on materials supplied by them for the execution of such contract are already bared by the company as costs of contracts and therefore no excise duty is to be charged further at the time of completion of pollution control eqiupment.
Please guide in this matter.
Thanks in advance.
CAclubindia
