1. Both these revenue appeals raises a common question of law and facts and they are taken up together for disposal as per law. The commissioner (Appeals) in both the appeals has considered the aspect pertaining to transfer of technical know-how by a foreign collaborator to the respondent herein and has held that such transfer of technical know-how or assistance does not come within the ambit of the definition of consulting engineers by levy of service tax. This is not challenged.
The findings recorded by the Commissioner in OIA No. 191/2004 ST dated 15.12.04 is reproduced herein below: I have perused the records of the case and have carefully considered the submission made during the personal hearing on 25.11.2004.
It is seen that the appellants have entered into an agreement with the foreign company which gives the right/licence to manufacture certain products and sell the same in certain territory. The transfer of technology, technical assistance and other guidance relating to the manufacture of these products were agreed to be extended by the foreign company on payment of certain royalty amount.
1. Whether transfer of technology, technical assistance etc., in regard to the manufacture of certain products in the appellants would amount to rendering service in the capacity of the Consulting Engineer for the purpose of Service Tax.
2. Whether the appellants can be held as an agent/authorized person of the foreign company and made liable to pay the Service Tax in case the service amounts to consulting engineer.
In this regard, I would like to draw my conclusion on the basis of the Decision of Hon'ble CESTAT, West Zonal Bench, Mumbai in the case of Navinon Ltd., v. Commissioner of Central Excise, Mumbai-VI . In fact the Hon'ble Bench has discussed the very same issues and given their finding. I feel that this decision is squarely applicable to the instant case and the gist of the decision is reproduced below: Service Tax-Foreign Company-Recipient of technical know-how from foreign company against payment of royalty, not being authorized representative of that company in India, could not be fastened with Service Tax liability - Rule 6 Service Tax Rules, 1994.
Service Tax - Deduction at source - in absence of provisions for same, it cannot be insisted upon by department.
Service Tax - Liability of recipient of service - for period prior to amendment of Rule 2(d) of Service Tax Rules 1994, recipient could not be held liable to tax.
Service Tax -- Person from outside India - For period prior to 28.2.1999 when second proviso to Rule 6(1) of Service Tax rules, 1994 was introduced, even though such person may be liable to duty, they could not be charged with suppression of facts - Section 78 of Finance Act, 1994.
Words and Phrases--Royalty--It is share of profit reserved by owner for permitting another person to use his property.
In as much as the Hon'ble CESTAT has answered almost all the issues of the instant case, I do not intend to discuss the same in detail.
Based on the above decision I hold that the services taken by the appellants from the foreign company by way of transfer of technical know-how and other assistance would not fall under the category of "Consulting Engineer" for Service Tax purpose. Having decided that the appellants are not liable to pay Service Tax/have not taken the services of a consulting engineer, the question of payment of interest and penalty does not arise.
Accordingly, I set aside the Order-in-Original No. 30/2004 dated 16.6.2004 passed by the Assistant Commissioner of Central Excise, Service Tax Division, Bangalore and allow the appeal filed by M/s Motor Industries Co. Ltd., Bangalore.
In the case of Goetze TP (India) Ltd., the Commissioner has passed a similar Order in OIA No. 193/2004 CE dated 15.12.2004.
2. Learned DR reiterated the grounds and contended that such transfer of technical know-how and assistance has to be treated as coming within the ambit of Consulting Engineers.
3. Learned Counsel submitted that the issue is decided in larger number of appeals in assessee's favour. He files a copy of the Final Order No.1745 & 1746/06 dated 12.10.06 rendered in the case of Kirloskar Electric Company which is followed in large number of judgments. He also refers to Amco Batteries Ltd. v. Commissioner of Service Tax Bangalore Final Order No. 107/07 dated 12.10.07 wherein also the issue stands decided. Further reference is made to COEN Company v. CCE (Appeals), Mangalore (2006 (2) S.T.R. 488 (Tri-Bang), Navinon Ltd. v.CCE Mumbai , Bajaj Auto Ltd. v. CCE&C Aurangabad .
4. We have considered the submissions and perused the judgments cited by the counsel. It is seen that the issue is no longer res-integra and the Commissioner has rightly followed the rulings in his findings and has correctly decided the issue in assessee's favour. The citations referred to above support the assessee's case. There is no merit in these appeals and the same are rejected.
(Operative portion of the order already pronounced in open court on conclusion of the hearing)