Customs, Excise and Gold Tribunal - Bangalore
Araco Corporation vs Commissioner Of Central Excise on 21 October, 2004
Equivalent citations: 2005(180)ELT91(TRI-BANG), 2006[3]S.T.R.438
ORDER S.L. Peeran, Member (J)
1. For the purpose of hearing the appeal, the appellants are required to pre-deposit Service Tax of Rs. 31,45,170/- and penalty of Rs. 1,81,000/. The appellants are based in Japan. They had transferred technical know-how in terms of their licence to their Indian counterpart. Their contention is that they are registered under the Research and Development Cess Act, 1986 which defines Technology. As per Section 2(h) of the Act, "Technology means any special or technical knowledge or any special service required for any purpose whatsoever by an industrial concern under any foreign collaboration, and includes designs, drawings, publications and technical personnel". It is their contention that both the authorities have noted about the transfer of technical know-how categorically and yet have proceeded to presume that such an act of transfer of know-how through their licence comes within the purview of the "Consulting Engineering Services" learned Counsel submits that they had taken 18 grounds in their memorandum of appeal before the Commissioner (Appeals) but the same has not been looked into. Commissioner has proceeded to go by the CBEC clarification to consider the transfer of technical know-how falling within the category of consulting engineer services. He submits that the order is not a proper order and requires to be set aside on this ground alone. He further submits that the Mumbai Bench in the case of M/s. Navinon Ltd. v. CCE, Mumbai [2004 (172) E.L.T. 400 (Tribunal) = 2004 TIOL 710 CESTAT-Mum.] has held that the transfer of technical know-how will not come within the category of consulting engineer. He submits that the appellants have a very strong case on merits and they should be given full waiver. He points out further that the Finance Act, 2004 has brought in category No. 55B to include "intellectual property services" which means "(a) transferring whether permanent or otherwise, or (b) Permitting use or enjoyment of any intellectual properly right." Therefore he submits that as there was transfer of intellectual property which comes under the category of 55A introduced from 2004 and not under the "Consulting Engineer Services" learned JCDR refers to the notification No. 18/2002-S.T. which clarifies that transfer of technical know-how is covered under category of consulting engineer services and therefore the services rendered by the appellant will clearly fall within the category and they should pre-deposit the amounts as they are not pleading financial hardship.
2. On a careful consideration of the findings given by both the authorities, we are inclined to agree with the learned Counsel that the learned Commissioner has not considered all the 18 grounds in the order. The order cannot be said to be a speaking order. That the appellants are registered under the Research and Development Cess Act, 1986 which under Section 2(h) defines what the technology means. There is no dispute with regard to the appellants having transferred the technical know-how under the licence. Certain clauses of the licence are being interpreted by both the authorities to bring them within the category of Consulting Engineers. In terms of the amended Finance Act category 55(a) intellectual property has been defined. Prima facie, the activity in terms of the licence falls within this category. In so far as the argument of learned JCDR that the notification 18/02 clarified about the technical know-how falling under consulting engineer category, we are of the considered opinion that the effect of the notification will have only prospective effect and cannot be said to have effect for the period in question, which is November, 1998 to December 2000. As the appellants have shown strong prima facie case in their favour, therefore the stay application is allowed unconditionally granting full waiver of the amount in question and staying its recovery till the disposal of the appeal. Revenue is barred from recovering the same in terms of Larger Bench judgment rendered in the case of IPCL, 2004 (169) E.L.T. 267 (Tri. - LB). Since the amounts are substantial the prayer from both the sides to list the matter for out of turn hearing is accepted. The case being covered by the Tribunal judgments cited by the Counsel, the prayer for early hearing is accepted. Appeal to come up for hearing on 7th March, 2005. Registry to locate the appeals of like nature and link the same with this appeal for hearing. Learned Counsel agrees to give the appeal numbers for linking the same.