Custom, Excise & Service Tax Tribunal
Cst, Delhi vs M/S. Suzuki Motor Corporation on 13 September, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Service Tax Appeal No.444 of 2008
CST, Delhi Appellant
Versus
M/s. Suzuki Motor Corporation Respondent
[Arising out of Order-in-Original No.36/VKG/CST/2008 dated 8.4.2008 passed by the Commissioner of Service Tax, New Delhi].
For approval and signature:
Honble Smt. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see CESTAT (Procedure) Rules, 1982.
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
Appearance: Rep. by Shri Sonal Bajaj, SDR for the appellant.
Rep. by none for the respondent.
CORAM : Honble Smt. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Technical Member Order No. ________________ Dated : 13.9.2011 Per Rakesh Kumar:
The respondent, M/s. Suzuki Motor Corporation, Japan entered into an agreement dated 15.12.98, as amended by agreement dated 31.08.99 and 9.1.2001, with M/s. Maruti Udyog Ltd. (MUL), India for transfer of technical know-how for manufacture of certain models of cars and to provide technical assistance to MUL in this regard. As per the agreement, the respondent was to depute their personnel to give technical advice and guidance in connection with manufacture of motor vehicles based on the technology transferred. As per the agreement for transfer of technical know-how and technical assistance, Maruti Udyog Ltd. was to make a lump sum payment of amount of Y 90,00,00,000/- (Rs.29,33,71,766/-) in three instalments and besides this, they were to pay running royalty at the rate specified in the agreement. The department was of the view that the amount received by the Respondent was for providing consulting engineers services, which is taxable under Section 65 (105)(g) read with Section 65(31) of the Finance Act. It is on this basis that a show cause notice dated 14.01.2004 was issued to the respondent in Japan for recovery of service tax amounting to Rs.23,79,20,492/- for the period from 1.7.97 to 31.3.2002 along with interest and also for imposition of penalty on them under Section 76, 77 and 78 of the Finance Act, 1994. The show cause notice was adjudicated by the Commissioner vide Order-in-Original No.36/VKG/CST/2008 dated 8.4.2008 by which the proceedings initiated against the Respondent were dropped.. The Commissioner in this case held that the consideration received as lump sum and royality was not for any advice, consultancy and technical assistance in any engineering discipline but was for transfer of technical know-how and hence, no consulting engineers service, as defined under Section 65(105) (g) read with Section 65(31) of the Finance Act, 1994, has been provided. This order of the Commissioner was reviewed by the Committee of Chief Commissioners directing the Commissioner to file a review appeal and accordingly, in pursuance of the directions of the Committee of Chief Commissioners, the present appeal has been filed.
2. Heard both the sides.
3. None appeared for the respondent though a notice to them had been issued.
4. Heard Shri Sonal Bajaj, ld. Sr. Departmental Representative, who assailed the impugned order by reiterating the grounds of appeal in the revenues appeal and emphasized that the respondent during the period of dispute had provided engineering consultancy services to M/s. Maruti Suzuki Ltd.
5. We have carefully considered the submissions from both the sides and perused the records.
5.1 On going through the provisions of the agreement of the respondent with M/s. Maruti Udyog Ltd. as discussed in the show cause notice, we find that as mentioned in para-2 of the show cause notice, the agreement between M/s. Maruti Motors, Japan and M/s. Maruti Udyog Ltd., Gurgaon was to transfer the technical know-how and also provide assistance in this regard to Maruti Udyog Ltd., Gurgaon for manufacture and sale of certain models of cars in India. The technical know-how made available by the respondent to M/s. Maruti Udyog Ltd. was to be used only for manufacture and sale of the models of cars mentioned in the agreement and not for any other products. The consideration for transfer of technical know-how by the respondent to M/s. Maruti Udyog Ltd., Gurgaon for manufacture and sale of certain models of cars was a one time lump sum payment of 90 crores and a running royalty. From the various clauses of the agreement, as discussed in the show cause notice, it is clear that the purpose of the agreement was transfer of technology transfer of certain technical information regarding manufacture of certain models of cars to Maruti Udyog Ltd subject to certain conditions. The Tribunal in the case of CCE, Madurai Vs. Reichie De Massari Ag Switzerland reported in 2005 (184) ELT 260 (Tribunal) has held that Technology transfer and receipt of payments for the same is Engineering Consultancy Service. The same view has been taken by the Tribunal in the case of CCE, Chennai-III Vs. Video Friction Material India Pvt. Ltd. reported in 2005 (185) ELT 78 wherein the Tribunal had held that transfer of technology by foreign company to the respondent against payment of royalty by the latter as consideration for transfer of technology is not engineering consultancy service. The same view has been taken by the Tribunal in the cases of Yamaha Motors (I) Pvt. Ltd. Vs. CCE reported in 2005 (186) ELT 161, M/s. Navinon Ltd. Vs. CCE, Mumbai-VI reported in 2004 (172) ELT 400 (Tribunal) and M/s. Bajaj Auto Ltd. Vs. CCE, Aurangabad reported in 2005 (179) ELT 481 holding that the transfer of technical know-how under licensing agreement against payment of royalty, whether one time or running royalty, is not consulting Engineers Service. Therefore, the service provided by M/s. Suzuki Motor Corporation, Japan during the period of dispute could not be classified as Consulting Engineers service and the same did not attract any service tax. We, therefore, do not find any infirmity in the impugned order. The Revenues appeal is dismissed.
[Operative part of the order already pronounced in the open court].
( Archana Wadhwa ) Member (Judicial) ( Rakesh Kumar ) Member (Technical) Ckp.
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