Cce Vs. Mrf Ltd.

Cce vs Mrf Ltd.

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu Decided Oct 20, 2004

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Citation: sooperkanoon.com/36890
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Judge: P Chacko
Decided On: Oct 20, 2004
Subject: Service Tax

Case Summary

AI-generated summary - not the official court judgment text.

Service Tax

Key legal issue: Service Tax

Parties & Advocates

Appellant / Petitioner

Cce

Respondent

Mrf Ltd.

Legal References

Reported In: (2004)(117)LC672Tri(Chennai)

Excerpt

.....procedure, data and techniques and also undertook training of the employees of the company about the projects relating to "research and development of automotive tyres which includes...." ld counsel has pointed out that the above services were, in fact, provided by mr. fred lewis, a chemistry graduate. mr. fred lewis was not a civil/mechanical/electrical engineer so as to be able to render any such services as mentioned in the board's circular referred to by the appellant. the services referred to in the board's circular could be given only by such engineers and the same fall in the category of "consulting enginner services". the services rendered by m/s tyreign inc., usa, to m/s mrf ltd., were in the nature of "scientific and technical consultancy service" which became taxable only with effect from 16.7.2001. during the period of dispute, these services were not taxable under section 65 of the finance act, 1994. i am in full agreement with these arguments of the counsel, which appear to be supported by the very description of service stated in the invoice issued by the foreign company to the respondents. this description reads: "technical consultancy and other related services". it is also pertinent to note that the respondents are registered with the department for payment of service tax on "scientific and technical consultancy service" as evidenced by the registration certificate issued under section 69 of the finance act, 1994.5. ld. counsel has made another forceful submission. he has contended that "scientific and technical consultancy service", which was specified for the purpose of levy of service tax with effect from 16.7.2001, was not a part of the pre-existing "consulting engineer service" prior to the said date. in other words, "scientific and technical consultancy service" was a new service introduced on 16.7.2001. ld. counsel has referred to section 137 of the finance act.2001, which provided for the levy of service tax on 15 new items. "new.....

Full Judgment

1. This appeal of the Revenue is against dropping of a demand of Service Tax on the respondents. The original authority had demanded Rs. 53,075/- from the respondents towards Service Tax on the total charges paid by them to a foreign company, namely, M/s. Tyreign Inc., USA, on the basis of a finding that they had paid such charges for "Consulting Engineer Service" as defined under Clause (31) of Section 65 of the Finance Act, 1994. It also imposed penalties on the respondents under Sections 76 to 78 of the said Act. The decision of the original authority was set aside by the Commissioner (Appeals) in an appeal filed by the assessee. It was held by ld. Commissioner (Appeals) that the service received by the assessee from the foreign company was not "Consulting Engineer Service' but in the nature of "Scientific and Technical Consultancy Service", which had become a taxable service with effect from 16.7.2001 only. The respondents had received the service from the foreign company and paid for the same prior to 16.7.2001.

Therefore, ld. Commissioner (Appeals) set aside the demand of Service Tax. The present appeal is against the decision of the lower appellate authority.

2. SDR reiterated the grounds of this appeal. The respondent's Counsel argued in defence of the impugned order.

3. In have carefully considered the submissions. According to the appellant, the following services were rendered to the respondents by M/s Tyreign Inc., USA,: (c) Made available to M/s MRF complete technical information, methods, procedures, data and techniques available with M/s Tyreign.

(f) Train the employees of M/s MRF for successful implementation and completion of the project in an efficient, economical and expeditious manner.

The appellant states that the above services are covered by Board's Circular No. B 43/5/97-TRU dated 2.7.1997, wherein the scope of service of a "Consulting Engineer" was explained thus: "the services which attract the levy include all the services which are rendered in the capacity of a professional person and specifically include the services pertaining to structural engineering works or civil/mechanical/electrical engineering works or relating to construction management." Ld. Commissioner (Appeals) has treated the services obtained by the respondents from abroad as "Scientific and Technical Consultancy Service", which was not a taxable service prior to 16.7.2001. The period of dispute in the instant case is 2000-01.

4. Ld. Counsel has referred to the terms of the relevant agreement between M/s MRF Ltd, and M/s. Tyrein Inc., USA. I have perused this agreement available on record. It is seen that this agreement provided for the services of Mr. Fred Lewis (Director and Secretary of the foreign company) being given to M/s. MRF Ltd. for its "research and development activities with regard to automotive tyres". This nature of the services provided by M/s. Tyreign Inc., USA, to MRF is also seen to have been noted by the original authority. The Order-in-Original noted thus: "As per the agreement, M/s Tyreign Inc., USA, through the deputation of technicians, provided the company complete technical information, methods, procedure, data and techniques and also undertook training of the employees of the company about the projects relating to "research and development of automotive tyres which includes...." Ld Counsel has pointed out that the above services were, in fact, provided by Mr. Fred Lewis, a Chemistry Graduate. Mr. Fred Lewis was not a Civil/Mechanical/Electrical Engineer so as to be able to render any such services as mentioned in the Board's Circular referred to by the appellant. The services referred to in the Board's Circular could be given only by such engineers and the same fall in the category of "Consulting Enginner Services". The services rendered by M/s Tyreign Inc., USA, to M/s MRF Ltd., were in the nature of "Scientific and Technical Consultancy Service" which became taxable only with effect from 16.7.2001. During the period of dispute, these services were not taxable under Section 65 of the Finance Act, 1994. I am in full agreement with these arguments of the Counsel, which appear to be supported by the very description of service stated in the invoice issued by the foreign company to the respondents. This description reads: "Technical Consultancy and other related services". It is also pertinent to note that the respondents are registered with the department for payment of service tax on "Scientific and Technical Consultancy Service" as evidenced by the registration certificate issued under Section 69 of the Finance Act, 1994.

5. Ld. Counsel has made another forceful submission. He has contended that "Scientific and Technical Consultancy Service", which was specified for the purpose of levy of Service Tax with effect from 16.7.2001, was not a part of the pre-existing "Consulting Engineer Service" prior to the said date. In other words, "Scientific and Technical Consultancy Service" was a new service introduced on 16.7.2001. Ld. Counsel has referred to Section 137 of the Finance Act.

2001, which provided for the levy of Service Tax on 15 new items. "New Services" is an expression used in Section 137 and the first item in the list of 15 new services is "Scientific and Technical Consultancy Service". Ld. Counsel has convincingly argued that "Scientific and Technical Consultancy Services" having been introduced as a "new service" for the purpose of levy of Service Tax w.e.f. 16.7.2001 only, cannot be treated as part of the pre-existing "Consultancy Enginner Service".

6. In the result, the order of ld. Commissioner (Appeals) is affirmed and this appeal of the Revenue is rejected.

(Operative part of the order was pronounced in open court on 20.10.2004.)

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Tami... Same Parties Cce vs Mrf Ltd. Same Subject Service Tax Same Judge P Chacko