Custom, Excise & Service Tax Tribunal
Mumbai vs Leibert Corporation on 4 June, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/089/2006
[Arising out of Order-in-Appeal No: AT/679/M-III/2005 dated 26/12/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone II.]
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
Commissioner of Service Tax
Mumbai
Appellant
Vs
Leibert Corporation
Respondent
Appearance:
Shri V.K. Agarwal, Addl. Commissioner (AR) for the appellant Shri Bharat Raichandani, Advocate for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 04/06/2013 Date of decision: 04/06/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
This is Revenues appeal filed against Order-in-Appeal No: AT/679/M-III/2005 dated 26/12/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone II.
2. The respondent, M/s. Leibert Corporation, USA, entered into a technical know-how agreement with M/s. Emerson Power Network (I) Pvt. Ltd. for supply of technical know-how and licence to the service-recipient in India for the rights to manufacture, sell and distribute and use licensed product and the technology in India. In consideration thereof, the service-recipient agreed to pay a lumpsum amount of US $3,00,000/- and a running royalty of 5%/8% on the domestic sale price of the product for a period of 7 years from the date of commencement of production. The Revenue was of the view that the service rendered by the foreign service provider is liable to service tax in India under the category of Consulting Engineers Service and, therefore, a show cause notice dated 26/03/2003 was issued demanding service tax of ` 19,04,143/- for the services rendered during the period July, 1997 to December, 2001 along with interest thereon and also proposing to impose penalties. The notice was adjudicated vide order dated 13/09/2004 wherein the demands were confirmed along with interest and also penalties were imposed under the provisions of the Finance Act, 1994 on M/s. Leibert Corporation, USA. On appeal, the lower appellate authority held that, in view of the decisions of this Tribunal in the case of Navinon Ltd. vs. Commissioner of Central Excise, Mumbai VI 2004 (172) ELT 400, Yamaha Motors (India) Pvt. Ltd. vs. Commissioner of Central Excise, Delhi IV 2005-TIOL-598-CESTAT-DEL, the services rendered cannot be classified under heading Consulting Engineers Service and accordingly allowed the appeal. The Revenue is aggrieved of the same and is before us.
3. In the grounds of appeal, it has been urged that the technical know-how provided by Leibert Corporation to Indian entity appears to be advice and technical assistance provided to a client and is liable to service tax under the category of Consulting Engineers Service. It is also stated that the Revenue has gone in appeal against the decision in the case of Navinon Ltd. (supra) before he honble High Court of Bombay and the matter is pending before the High Court and, therefore, the lower appellate authority was wrong in his conclusions.
4. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the grounds urged in the appeal memorandum.
5. The learned counsel appearing for the respondent submits that the transaction involved in the present case is one of supply of technical know-how which includes supply of patents, trade secrets and other technical information and services has been rendered not in terms of any advice, consultancy or technical assistance and, therefore, the transaction does not attract provisions of Consulting Engineers Service. He relies on the decisions of this Tribunal in the case of Kinetic Engineering Ltd. vs. Commissioner of Central Excise, Pune I 2012 (25) STR 26 and Aravind Fashions Ltd. vs. Commissioner of Service Tax, Bangalore 2007 (7) STR 178 (Tri.-Bang.) affirmed by the honble Karnataka High Court, in support of his submissions. Accordingly, he prays for dismissing the Revenues appeal.
6. We have carefully considered the submissions made by both the sides.
7. Consulting Engineers Service relates to rendering of advice, consultancy or technical assistance in any branch of engineering to a client by a consulting engineer or an engineering firm. The said service does not, in any way, relate to supply of technical know-how which the respondent has undertaken in the present case. They have supplied to the client in India know-how by way of patents, trade secrets, processes, etc. so that the recipient in India can undertake manufacture of licensed products. In consideration thereof, royalties/ licence fees had been paid by the recipient to the service provider. This activity, by no stretch of imagination, can be considered as coming within the purview of Consulting Engineers Service. This Tribunal in the case of Aravind Fashions Ltd. which has been affirmed by the honble High Court of Karnataka, and in the case of Kinetic Engineering Ltd. (cited supra) has clearly held that transfer of technical know-how does not come within the purview of Consulting Engineers Service. The same view was held by the Tribunal in the case of Navinon Ltd. (supra), which is pending before the honble High Court. It is informed by the learned counsel for the respondent that the said decision of this Tribunal has not been stayed. In view of the above, we are of the considered view that the activities undertaken by the respondent in the case is not exigible to service tax under the category of Consulting Engineers Service.
8. Therefore, we do not find any merit in the Revenues appeal and the same is dismissed.
(Dictated in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 2