Custom, Excise & Service Tax Tribunal
Korpan Ltd vs Commissioner Of Central Excise on 4 November, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.ST/794/12 (Arising out of Order-in-Appeal No.US/530/RGD/2012 dated 30/08/2012 passed by Commissioner of Central Excise (Appeals), Mumbai-II) For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) 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? ========================================
Korpan Ltd., Appellant
Vs.
Commissioner of Central Excise, Respondent
Raigad
Appearance:
Shri.Ramnath Prabhu, Advocate for appellant
Shri.AB Kulgod, Asst. Comm. (AR), for respondent
CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial)
Honble Mr. Raju, Member (Technical)
Date of Hearing : 04/11/2016
Date of Decision : 02/12/2016
ORDER NO
Per: M.V. Ravindran
1. This appeal is directed against Order-in-Appeal No.US/530/RGD/2012 dated 30/08/2012 passed by Commissioner of Central Excise (Appeals), Mumbai-II.
2. Heard both sides and perused the records.
3. On perusal of the records, it transpires that the issue that falls for consideration is whether the appellant needs to be saddled with service tax liability of an amount of Rs..4,39,226/- under the category of Consulting Engineer Services for the period January 1998 to March 2002 or otherwise.
4. It transpires from the records that during the period in question, appellant had received a consideration from Kampala Pharma LLC and Global Pharma LLC who are situated abroad, for the transfer of technology/technical collaboration in respect of the technology it was developed by them in pharmaceutical field. A show-cause notice was issued demanding service tax under Consulting Engineer Services for the entire amount. Appellant argued before the lower authorities that out of Rs.4.21 crores they received; for Rs.3.33 crores bank realization certificate was produced, for the balance amount of approximately Rs.88 lakhs, it was the claim of the appellant that they had not received the said amount from the service recipient situated abroad. Hence, the question of discharging service tax liability does not arise. The adjudicating authority as well as first appellate authority confirmed the demand raised along with interest and also imposed penalties.
5. Learned Counsel draws our attention to the facts of the case and submits that having not received the amount of approximately Rs.88 lakhs from Kampala Pharma LLC and Global Pharma LLC, they are not required to discharge the service tax liability as during the relevant time, service tax liability needs to be discharged only when they received the payment for the services rendered. His another submission is during the relevant period a definition of Consulting Engineers would not cover the service rendered by the appellant, as appellant is a manufacturer of pharmaceutical and bulk drugs and the technology which has been transferred by the appellant in respect of bulk drugs and is not covered under Consulting Engineer Services as the appellant is not an Engineering Firm or any professionally qualified engineer. He relied upon the decision of the Honble High Court of Karnaakain the case of Turbotech Precision Engineering Pvt. Ltd. 2010 (18) STR 545 (Kar.) for the proposition that in order to get covered under the category of Consulting Engineers, services should have been provided by an engineer or Engineering firm.
6. Learned DR reiterates the findings of the lower authorities.
7. We find strong force in the contention raised by the learned Counsel. We find from the records that the appellant had right from the adjudication stage was categorically stating that they had not received the balance amount of Rs.88 lakhs from Kampala Pharma LLC and Global Pharma LLC, during the period in question, service tax would arise only on receipt of the payments for the services rendered. As against this assertive statements of the appellant before the lower authorities and before us also, we find that Revenue has not marshaled any contrary evidence. We also note that the appellant had produced a certificate from the Chartered Accountant indicating that they had not received the said amount of Rs.88 lakhs.
8. Be that as it may, we find during the relevant period in question, the definition of Consulting Engineer, as per Section 65 (13) of the Finance Act, 1994 reads as under:
Consulting Engineer means any professionally qualified engineer or an engineering firm who, either directly or indirectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering.
9. It can be seen from the above reproduced definition that in order to get covered under the said definition, a person should be professionally qualified engineer or an Engineering firm. This definition was amended in the year 2006 wherein engineering firm has been substituted with the wordings anybody as corporation or any other firm.
10. Since we are concerned with the issue prior to amendment of definition, it has to be held that the appellants services of rendering/transferring technical know-how in respect of pharmaceutical and bulk drugs may not get covered under the definition of Consulting Engineer Services. Our this view is fortified by the judgement of the Honble High Court of Karnataka in the case of Turbotech Precision Engineering Pvt.Ltd. (supra), we reproduce the relevant paragraphs:
7.? During relevant period, the definition of Consulting Engineer defined under section 65(13) reads as hereunder :
consulting engineer means any professionally qualified engineer or an engineering firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering.
Subsequently the definition of Consulting Engineer has been amended under the Finance Act, 2006 which has come into effect from 1st May 2006, the definition of which reads as hereunder :
65(31) consulting engineer means any professionally qualified engineer of any body corporate or any other firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to any person in one or more disciplines of engineering.
8.?From the combined reading of the definition of Consulting engineer prior to 2006 and after 2006, it is clear to the Court that the service rendered by the Company had not been included under the definition of consulting engineer prior to 2006 as it stood under Section 65(13). As a matter of fact, this Court has decided the said point in CEA 12/2007 on 1st April 2010 stating that prior to the Amendment Act, 2006, the Companies were not included under the definition of consulting engineer. When we have taken such a view, considering the relevant assessment year in the present case we have to hold that the service rendered by the assessee-Company during relevant period cannot be brought under the category of consulting engineer. If the service rendered by the assessee cannot be considered as a consulting engineer, the question of calling upon the assessee to pay the service tax under the Finance Act, brought the assessee under the word consulting engineer does not arise at all. Therefore, the said point has to be answered against the revenue and in favour of the assessee.
11. In view of the foregoing facts and circumstances of the case, we hold that the impugned order is unsustainable and liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Pronounced in Court on ) (Raju) Member (Technical) (M.V. Ravindran) Member (Judicial) pj 1 6 AppealNo.ST/794/12