Customs, Excise and Gold Tribunal - Bangalore
Matrix Laboratories Ltd. vs The Commissioner Of Customs And Central ... on 16 August, 2007
Equivalent citations: 2008[9]S.T.R.15, (2008)14VST118(CESTAT-BLORE)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from OIO No. 01/2005-ST dated 21.12.2005 confirming Service Tax under the category of "Scientific or Technical Consultancy Services (STC)" for the financial period 2002 to 2003.
2. The appellant's contention is that they did not come within the category of "Scientific or Technical Consultancy Services (STC)". They are leading pharmaceutical company in India and they are engaged in the manufacturing and marketing of pharmaceutical products and diagnostics in India. They develop technology for the manufacture of Active Pharmaceutical Ingredients (APIs), which they have sold on valuable consideration to their clients M/s. Ranbaxy. There is no service provided therein continuously in terms of the agreement but it is a complete sale of the technology on consideration, therefore, they did not come within the said category. The learned Commissioner has deferred with them by rendering findings in para 13. In para 13, it is noted by the Commissioner that Clause h of Preamble of the agreement indicate that the appellant would supply APIs of the products to clients as a preferred customer at competitor's rates.
3. The learned Counsel submits that this is not a service but a sale of accessories and technology and incidental sales connected with the main technology cannot be deemed to be a STC service, as they are not receiving any commission nor providing continuous sales on commission basis, which should be a criteria for considering the appellants to be coming within the category for levy of Service Tax. He submits that this issue is covered by this Bench's ruling rendered in the case of Coen Co. v. CCE as reported in 2006 (2) STR 488 wherein in an identical situation, the supply of technology are not considered to be coming within the category of STC services but it is sale of goods. He also likewise relies on the rulings rendered in the cases of CCE v. Rubco Sales International (P) Ltd. as reported in 2006 (3) STT 404; Yamaha Motors (India) Pvt. Ltd. v. CCE as reported in 2005 (186) ELT 161, Amco Batteries Ltd. v. CCE, Bangalore as reported in 2006 (2) STR 346; CCE, Mangalore v. Micro Finish Valves (P) Ltd. as reported in 2006-TIOL-109-CESTAT-BANG; Betts UK Ltd. v. CCE, Goa as reported in 2006-TIOL-948-CESTAT-MUM and Ispat Industries Ltd. v. CCE, Raigad as reported in 2007-TIOL-399-CESTAT-MUM.
4. The learned JDR relies on para 13 of the impugned order and distinguishes the judgments cited by the Counsel. He also files written submissions on behalf of the Department. It is his submission that the impugned order is justified and correct. It is stated in the written submission that as per the Agreements entered into by M/s. Matrix with M/s. Ranbaxy, M/s. Matrix are required to develop technology for manufacture of 21 products by non-infringing process. M/s. Matrix have developed on an exclusive and immediate basis non-infringing manufacturing process or technology and provided all such technology and technical documentations to M/s. Ranbaxy. Therefore, this activity clearly falls within the ambit of definition of Section 65(92) of the Finance Act, 1994. Therefore, he submits that the order passed is a correct order and requires to be confirmed. He further relies on the Apex Court judgment in Bharat Sanchar Nigam Ltd. v. UOI 2006 (2) STR 161 (SC) which has confirmed the levy of sales tax in respect of goods which were sold. It has also observed that Service Tax can also be levied if there is sale also.
5. The learned Counsel distinguishes this judgment and refers to the relevant paragraph which has noted about the levy of sales tax in circumstances where there is a sale and the levy of Service Tax in circumstances where there is rendering of service. He submits that in the present case, there was no service being rendered and the entire technology was transferred by a sale and when the sale consideration has been paid to the appellant, then the question of bringing them under the Service Tax net does not arise.
6. We have carefully considered the submissions and also specifically the finding recorded in para 13 of the impugned order. We have considered the terms of the Agreement. On perusal of the terms of the Agreement, we notice that the assessee has sold the technical know-how after developing the technology for manufacture of Active Pharmaceutical Ingredients on valuable sale consideration to their client M/s. Ranbaxy Ltd. The Revenue is required to establish that there was no sale of the technology developed by the assessee but what was rendered was only service in terms of the definition of the term Scientific or Technical Consultancy Services. The learned JDR persuade us to accept the terms of the definition which contemplates that when there is technical assistance in any manner, then, it should be considered as service. Further, we find that the technology was developed for manufacture of Active Pharmaceutical Ingredients and was sold as such with all the rights and technical documentations. The appellants do not have any right on the technical information sold to M/s. Ranbaxy Ltd. It is not the case that they received any commission for the services rendered in the form of consultation fee. This is a case of transfer of technology without holding any rights and receipt of valuable sale consideration. In such a circumstance, the view taken by this Bench in the rulings rendered by this Bench and other Benches, as cited by the Counsel and noted supra, would apply to the facts of the case. The judgment of BSNL is clearly distinguishable, as the issue therein pertains to levy of Sales Tax in respect of goods which were sold. It is not the situation in the present case. Therefore, we do not find any merit in the impugned order. The impugned order is not legal and proper in the light of the citations noted. Hence, the impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Pronounced and dictated in open Court)