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TMI Blog2010 (9) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Wintac Ltd. towards Technical Know-how required for manufacture of P or P medicines for which RHCL was the sole purchaser. The period of dispute is the year 2000. 2. The facts of the case are that the authorities received intelligence to the effect that M/s. Wintac Ltd. (Wintac) had entered into an agreement with RHCL for transfer of technical know-how in respect of 76 products/brands to RHCL for a consideration of Rs. 25 crores. This was on 30-6-2000. On 12-7-2000, RHCL entered into an Agreement with Wintac for manufacture of products on loan lincencee/contract manufacture basis. RHCL was the sole customer of these products manufactured by Wintac. As Wintac had already sold the relevant technical know-how to RHCL, it was tentatively held by the authorities that Wintac had received technical know-how for manufacture of P or P Medicines free of cost from its customer. The technical know-how involved was of value Rs. 25 crores. This was additional consideration includible in the assessable value of the products manufactured and sold by Wintac in terms of Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. During investigation, Wintac admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation. The appellants had furnished the relevant agreements for transfer of technical know-how and the loan licensee arrangement to the Department. They had filed revised price declaration on entering into the agreements showing reduced assessable value. There was no suppression of facts and longer period could not be invoked to raise the demand for duty short paid by the assessee. 2.2 Adjudicating the allegations contained in the Show Cause Notice, the Commissioner rendered the following findings. Central Excise Duty was a tax on manufacture and production of excisable goods. Any demand of differential duty short levied or short paid had to be with reference to the excisable goods manufactured and cleared from a factory. Where excisability of the goods was not an issue, demand for duty could arise on account of a dispute regarding the rate of duty applicable or a valuation dispute with respect to the goods involved. In any case, the demand had to be quantified with reference to the excisable goods involved. In the instant case, the assessee received Rs. 25 crores on sale of technical know-how in respect of 79 products. On 12-7-2000, Wintac entered into an Agreement with RHC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 2000. Wintac had received not only the mutullay agreed price in terms of the Agreement dated 12-7-2000 but also the consideration for technical know-how under an earlier Agreement dated 30-6-2000. The technical know-how charges were inextricably linked with the assessable value of the products. These had to be treated as additional consideration in terms of Rule 6 of the Valuation Rules and the value for assessment determined accordingly. The appellant Revenue seeks to confirm the proposals contained in the Show Cause Notice. 3.1 Revenue relied on the following case-laws :- (i) Ucal Fuel Systems Ltd. v. CCE, Chennai [2007 (216) E.L.T. 370 (Tri.-Chennai)] (ii) CCE, Jamshedpur v. Tata Motors [2009 (237) E.L.T. 147 (Tri.-Kolkata)] (iii) K.R.C.D. (I) Pvt. Ltd. v. CCE, Mumbai [2004 (176) E.L.T. 427 (Tri.-Mumbai)] (iv) Moriroku UT India (P) Ltd. v. State of UP [2008 (224) E.L.T. 365 (S.C.)] 3.2 During hearing, the learned JCDR reiterated the grounds raised in the appeal and took us through the case-laws relied on in support of the appeal. 4. The learned Counsel appearing for the assessee relied on the decision of the Tribunal in the following cases :- (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough Rs. 25 crores is the consideration received by Wintac for transfer of technical know-how relating to 79 products, the loan licencee agreement covered only 19 medicines out of which only nine were produced and cleared by the appellants during the material period. The cost relatable to any particular medicine manufactured during the material period is not worked out. We also find that it is not easy to apportion the cost relatable to technical know-how to a unit of either of the nine medicines manufactured and cleared by the appellant during the material period. 5.2 The Commissioner found that the Show Cause Notice was issued invoking larger period, but the notice did not indicate the clearances in respect of which the notice was issued. There was no relevant date for the demand raised in the Show Cause Notice. We find considerable merit in this finding of the Commissioner. 5.3 The pertinent portion of Section 11A of the Act reads as follows : SECTION 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or [erroneously refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... con (A) Pty. Ltd. case (supra), the Supreme Court had considered the dispute involving taxation of fringe benefits under the Income Tax Act. Their Lordships of Apex Court reproduced the clarification issued by the, CBDT in a Circular in the form of answers to frequently asked questions in the judgment. The following portion of the Circular extracted in the judgment has been relied on by the appellants in support of their claim that in the subject case, in the absence of a mechanism to compute the tax liability towards cost relatable to technical know-how, such duty was not liable to be paid. Answer : In terms of the provisions of sub-section (1) of section 115WA, an employer in India is liable to FBT in respect of the value of fringe benefits (a) provided by him to his employees; and (b) deemed to have been provided by him to his employees. The scope of fringe benefits provided or deemed to have been provided is defined in section 115WB. Sub-section (1) of the said section defines the scope of fringe benefits provided by the employer to his employees. Similarly, sub-section (2) of the said section defines the scope of fringe benefits deemed to have been provided by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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