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2014 (1) TMI 719 - AT - Service TaxDemand of service tax - Consulting Engineers service - Payment of royalty - Held that - appellant received technical know-how from M/s. from M/s. Corrocoat Ltd., UK, for which they have paid royalty. The technical know-how was for the purpose of manufacture, use and sale of products in India by the respondent and the information provided was a relatable to the production process, format and technology. Accordingly, the appellant paid royalty for the technical know-how received - supply of technical know-how does not come within the ambit of Consulting Engineer s Service - Following decision of BST Ltd. Vs. CCE, Cochin, 2006 (5) TMI 445 - CESTAT BANGALORE , CCE & ST, Bangalore Vs. Molex (India) Ltd., - 2007 (4) TMI 48 - CESTAT,BANGALORE & CCE, Bangalore Vs Mico Ltd., - 2007 (5) TMI 191 - CESTAT, BANGALORE - Decided against Revenue.
Issues:
1. Classification of service received from abroad under "Consulting Engineers Service" 2. Liability of royalty paid under service tax Issue 1: Classification of service received from abroad under "Consulting Engineers Service" In the first appeal (ST/242/05), the Revenue filed an appeal against the lower appellate authority's decision regarding the classification of services received by the appellant from abroad under "Consulting Engineers Service." The Revenue argued that the service should be classified as such, making the royalty paid by the appellant liable to service tax. The lower appellate authority, however, based on previous Tribunal decisions, held that the services were not liable to service tax under this category. The Revenue contended that the supply of designs and drawings constituted technical advice, thus creating a service tax liability. The respondent, on the other hand, cited various Tribunal decisions where designs and drawings were considered goods assessable to Customs duty, thereby exempt from service tax. The Tribunal, after considering the arguments from both sides and the precedent cases, upheld the lower appellate authority's decision, stating that designs and drawings are goods and not subject to service tax, ultimately dismissing the appeal filed by the Revenue. Issue 2: Liability of royalty paid under service tax In the second appeal (ST/253/05), the appellant received technical know-how from a foreign entity for which they paid royalty. The Revenue sought to classify this activity under "Consulting Engineer's" service and demanded payment along with penalties. The lower appellate authority set aside the demands, citing previous Tribunal decisions and a High Court ruling that technical know-how supply from a foreign principal did not constitute consulting engineer service. The appellant argued that the technical know-how received was related to the production process, format, and technology for manufacturing products in India, and they paid royalty for this purpose. The Tribunal, considering the submissions from both sides and the previous rulings, concluded that the supply of technical know-how did not fall under "Consulting Engineer's Service." They referenced various Tribunal decisions and a High Court judgment supporting this view, ultimately dismissing the Revenue's appeal due to lack of merit. In conclusion, the Tribunal found no merit in the appeals filed by the Revenue in both cases and dismissed them as devoid of merits.
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