Custom, Excise & Service Tax Tribunal
Pune Iii vs Metal Art Corporation on 18 June, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS: ST/306, 311, 312 & 314/2005 & 102 & 103/2007
[Arising out of Orders-in-Appeal No: P.III/279/2005 dated 26/08/2005; P.III/281/2005 dated 29/08/2005; P.III/280/2005 dated 26/08/2005; P.III/277/2005 dated 25/08/2005 & P.III/BBP/035/07 dated 27/10/2006 passed by the Commissioner of Central Excise (Appeals), Pune III. & Order-in-Original No. 10/P-III/STC/ADJ/ZFS-06 dated 11/05/2007 passed by the Commissioner of Central Excise, 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 the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
APPEAL NOS: ST/306, 311, 312 & 314/2005
Commissioner of Central Excise
Pune III
Appellant
Vs
Honeywell Inc
Alfing Montagetechnik GmbH
Dana Corporation
Metal Art Corporation
Respondents
APPEAL NOS: ST/102 & 103/2007 Yazaki Corporation ZF Steering Gear (India) Ltd.
Appellant Vs Commissioner of Central Excise Pune II Respondent Appearance:
Shri Shobha Ram, Commissioner (AR), Shri V.K. Agarwal, Addl. Commissioner (AR), Shri Rakesh Goyal, Addl. Commissioner (AR) and Shri D.D. Joshi, Superintendent (AR) for the Revenue. Shri Bharat Raichandani, Advocate for appellant M/s. Yazaki Corporation &None for other assessees. CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 18/06/2013 Date of decision: 18/06/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
There are four appeals filed by Revenue against Orders-in-Appeal No: P.III/279/2005 dated 26/08/2005; P.III/281/2005 dated 29/08/2005; P.III/280/2005 dated 26/08/2005 and P.III/277/2005 dated 25/08/2005 passed by the Commissioner of Central Excise (Appeals), Pune III and two appeals filed by the appellants M/s. Yazaki Corporation against Order-in-Appeal No: P.III/BBP/035/07 dated 27/10/2006 passed by the Commissioner of Central Excise (Appeals), Pune III. and M/s. ZF Steering Gear (India) Ltd. against Order-in-Original No. 10/P-III/STC/ADJ/ZFS-06 dated 11/05/2007 passed by the Commissioner of Central Excise, Pune III. As a common issue is involved in all these appeals, they are taken up together for consideration and disposal.
2. In the appeals filed by the Revenue, the lower appellate authority held that supply/transfer of technical know-how/information by the foreign supplier to the Indian entity cannot be classified as Consulting Engineers Service and accordingly, he held that the demand of service tax under this service would not be sustainable in law. Revenue is aggrieved of these decisions and contends that the services rendered included rendering of technical assistance to the recipient in India and, therefore, the said activity is taxable in India at the hands of the service provider. The service recipient in India are M/s. Tata Honeywell Ltd., Pune; M/s. Bharat Forge Ltd., Pune; M/s. Spicer India Ltd., Pune and M/s. Synergetic Sales and Services Pvt. Ltd., Pune and the service providers are M/s. Honeywell Inc., USA; M/s. Dana Corporation, USA; M/s. Alfing Montagetechnik GmbH, Germany and M/s. Metalart Corporation, Japan. All the Foreign Service providers have entered into agreements with the Indian entities for supply of technical know-how for manufacture of their products in India by the service recipients in India for which payments have been made to the foreign service providers by the recipients of the services in India.
3. The learned appellate-Commissioner has held that supply of technical know-how does not come under the category of Consulting Engineers Service based on this Tribunals decisions in the case of Navinon Ltd. vs. Commissioner of Central Excise, Mumbai 2004 (172) ETL 400; Bajaj Auto Ltd. vs. Commissioner of Central Excise, Aurangabad 2005 (179) ELT 481; Turbo Energy Ltd. vs. Commissioner of Central Excise 2005-TIOL-488-CESTAT-MAD; and Araco Corporation vs. Commissioner of Central Excise 2005 (180) ELT 91 wherein this Tribunal had held that supply of technical know-how would not come under the category of Consulting Engineers Service.
4. The Additional Commissioner (AR) appearing for the Revenue pleads for allowing the appeal and reiterates the grounds urged in the appeal memorandum whereas the assessee-appellants contention is that the impugned orders are sustainable in law.
5. This Tribunal in a number of decisions, cited supra, and also in the following cases, namely, Aravind Fashions Ltd. vs. The Commissioner of Service Tax 2007 (7) STR 178; Kinetic Engineering Ltd. vs. Commissioner of Central Excise, Pune - I 2012 (25) STR 26 and Commissioner of Central Excise, Meerut I vs. Jain Steel 2000 (187) ELT 33 have consistently taken the stand that supply of technical know-how does not come under the purview of Consulting Engineers Service.
5.1. In view of the above position we do not find any merit in the appeals filed by the Revenue and accordingly we dismiss these appeals as devoid of any merit.
6. As regards the appeal filed by M/s. Yazaki Corporation and M/s. ZF Steering (Gear) India Ltd., these demands are also for supply of technical know-how and licensing agreement entered into by the appellant either with the Indian service recipient or with the foreign service providers and the demand for service tax has been made either from the recipient in India or from the foreign service provider by classifying the service under Consulting Engineers Service. The adjudicating and appellate authority in these cases have confirmed the demands by classifying the service under Consulting Engineers Service.
6.1. First of all, as held in the previous paras, supply of technical know-how does not fall under the purview of Consulting Engineers Service. Therefore, the demand is not sustainable in law. Secondly, with respect to the demand of service tax from the service-recipient, the liability to pay service tax on reverse charge basis by the service-recipient came into force w.e.f. 18/04/2006 whereas in the present case, the services were received much prior to that date. The honble High Court of Bombay in the case of Indian National Ship Owners Association vs. Union of India 2009 (14) STR 289 has held that before the introduction of Section 66A in the Finance Act, 1994, demand of service tax at the hands of recipient of the service is not sustainable in law.
6.2. In view of the above legal position, in these cases also we find that the demands are not sustainable and accordingly we allow these appeals.
7. To sum up, the four appeals filed by the Revenue are dismissed as devoid of merits and the two appeals filed by M/s. Yazaki Corporation and M/s. ZF Steering Gear (India) Ltd. are allowed with consequential relief, if any, in accordance with law.
(Operative Part of the Order Pronounced in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 7