Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Cummins Inc on 28 June, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. ST/23 & 24/06 (Arising out of Orders-in-Appeal No. P-III/359-360/05 dated 24.10.2005 and No. P-III/361/05 dated 25.10.2005 passed by the Commissioner of Central Excise (Appeals), Pune-III). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Pune-III Appellant Vs. M/s Cummins INC M/s Cummins India Ltd. Respondent Appearance: Shri Shobha Ram, Commissioner (AR) for Appellant Shri Prasad Paranjape, Advocate for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 28.06.2013 Date of Decision: 28.06.2013 ORDER NO. Per: P.R. Chandrasekharan
These two appeals filed by the Revenue are directed against Orders-in-Appeal No. P-III/359-360/05 dated 24.10.2005 and No. P-III/361/05 dated 25.10.2005 passed by the Commissioner of Central Excise (Appeals), Pune-III.
2. The respondent are M/s Cummins INC, Indiana, USA and M/s Cummins India Ltd., Pune. M/s Cummins INC, USA supplied technical assistance and know-how to their Indian counterpart to manufacture diesel engines and various components thereof as per the specification/ designs developed by them. For the services rendered, Indian entity was liable to pay annual technical support fee by way of royalty. The department was of the view that the said services merit classification under Consulting Engineers Service and accordingly, demanded Service Tax of Rs.73,06,346/- along with interest thereon for the period 1997-98 to 2000-01 from the foreign service provider vide notice dated 6.6.2002. The notice was adjudicated and the demand was confirmed along with interest and by imposing penalties. On appeal, the lower appellate authority set aside the order of the original adjudicating authority and allowed the appeal relying on the decisions of the Tribunal in the case of Bajaj Auto Ltd. vs. Commissioner of Central Excise, Aurangabad 2005 (179) ELT 481 (Tri-Mum), Navinon Ltd. Vs. Commissioner of Central Excise, Mumbai-VI 2004 (172) ELT 400 (T), Araco Corpn Vs. Commissioner of Central Excise, Bangalore 2005 (180) ELT 91, Samsung India Electronics Ltd. 2005-TIOL-620-CESTAT-DEL holding that the services do not come under the purview of Consulting Engineers Service. In the meanwhile, the Indian entity paid the Service Tax amounting to Rs.16,08,410/- under protest in respect of technical know-how received from the foreign service provider. Later on, they contested the demand and asked for refund of the tax paid. The refund was rejected by the sanctioning authority against which an appeal was preferred and vide order dated 24.10.2005, the appellate authority allowed the appeal. Revenue aggrieved of both these orders and is before us.
3. The argument made by the Revenue is that the service provided by the foreign entity envisages onsite technical assistance and therefore, the services rendered fall within the category of Consulting Engineers Service.
4. Learned Commissioner (AR) appearing for the Revenue also relies on the decision of this Tribunal in the case of Indian Farmers Fertilizer Co-op Ltd. Vs. Commissioner of Central Excise, Bareilly 2007 (5) STR 281 (Tri-Del), wherein it was held that in the case of supply of technical know where technical assistance was rendered at the site of the service recipient and the agreement also envisaged payment of fees for the technical assistance so rendered, the services relating to rendering of technical assistance would come under the Consulting Engineers Service and would be chargeable of Service Tax accordingly. It is the contention of the Revenue that the ratio of this decision would apply to the facts of the present case also and, therefore, the respondents are liable to pay Service Tax on the technical assistance received in India at the site of the recipient of the service. Since the impugned order does not take into account these facts, the same need to be set aside and Revenues appeals allowed.
5. Learned Counsel for the respondents submits that the facts in the present appeals are distinguishable from the facts involved in the Indian Farmers Fertilizer Co-op Ltd. (supra). In the Indian Farmers Fertilizer Co-op (IFFCO), as may be seen from para 9.2, there was a specific provision in the contract vide Sr. No. 4.2 and 4.3, which provided that for technical assistance in India, IFFCO shall pay fees to TOPSOE calculated on the basis of man day rates and escalation as specified Appendix VI to this Agreement and IFFCO shall pay directly to GV for the technical assistance in India by GV in accordance with the stipulation of the payment agreement. In the present case, the agreement specifically provides that for onsite assistance rendered in India, there shall be no specific charges and only living and travelling expenses is to be reimbursed. In other words, there is no separate charge for technical assistance rendered in India. Therefore, the ratio of IFFCO case will not apply. This Tribunal in a number of cases have consistently held that supply of technical know-how does not come under the purview of Consulting Engineers Service. Accordingly, he pleads that the order of the lower appellate authority is sustainable in law and, therefore, the Revenues appeal be dismissed.
6. We have carefully considered the submissions made by both the sides.
6.1 We have also perused the agreements entered into by Cummins INC, USA and Cummins India Ltd. The said agreement provides for supply of technical know-how and assistance for manufacture of diesel engines and components thereof. The technical know-how includes information regarding design data, manufacturing and quality control impressing processing, design and construction of plant facility, quality related problems of the licenced product and training to the personnel of the Indian entity. The agreement also envisages supply of updated data based on the current research and development and engineering done by the foreign service provider. It is seen that the activity undertaken would more appropriately fall under Intellectual Property Rights Service and not under Consulting Engineers Service and, therefore, the demand of Service Tax under the category of Consulting Engineers Service is not sustainable in law. The ratio of the decisions relied upon by the lower appellate authority would also apply.
6.2 As regards the reliance placed on the decision of the IFFCO case, the facts are different and distinguishable. In the IFFCO case, as rightly pointed out by the learned Counsel for the respondent, the agreement provided for payment of technical assistance rendered separately, whereas in the present case the agreement does not contain such a clause. On the other hand, the agreement provides that there are no separate charges for on site assistance and only travelling and living expenses shall be reimbursed by the service recipient to the service provider. In view of these material differences in the agreement, we are of the view that the ratio of the IFFCO case cannot be applied to the facts of the present case.
7. In view of these factual and legal positions, we do not find any merit in the Revenues appeals and accordingly, we dismiss the same.
(Dictated and pronounced in Court)
(Anil Choudhary) (P.R. Chandrasekharan)
Member (Judicial) Member (Technical)
Sinha
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