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TMI Blog2012 (5) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... working under the present title of M/s ACE Caldery Ltd and they took over the brand names of ACC Ltd for manufacture of the said products. Besides manufacturing such branded goods in their own factory they had engaged other manufacturers to manufacture goods using their brand name meeting quality standards set by them. 2. In some cases goods manufactured by the franchisees were supplied by the franchisees to customers in their own capacity. From the sale proceeds thus collected, the manufacturers were retaining a part for themselves and paying the balance amount to the appellants as opportunity cost of the appellants. This type of sale is referred to as "Direct sales" in the impugned order. In this type of sales the appellants had paid se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stay petition. 5. The appellants give the following explanation for direct dispatch sales: "In the direct dispatch pattern (transaction only in the years 2004 and 2005), the goods were manufactured and supplies under orders obtained directly by the suppliers/suppose franchisee themselves and the sale proceeds were collected by the suppliers/suppose franchisee. In invoice of the suppliers/suppose franchisees their real customer/consumer was shown as both customer and consignee and the Appellant received middleman commission through cheque after deducting the TDS, for giving the business to them. The Appellant paid service tax along with interest in the category of business auxiliary service for such commission received. This transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this type of transaction as under: "The manufacturers are selling the manufactured goods to the Appellant for which the manufacturers raising invoices to the Appellant. In the said invoices, the Appellant was shown as buyer and the customer of the Appellant whom the goods is ultimately sold was shown as consignee. In this transaction it is a sale of the goods by the manufacturers to the Appellant for which payment of sale proceed is made by the Appellant to the manufacturers. The Appellant thereafter raise sale bills to their buyers of the said goods purchased from the said manufacturers and receive payment directly. In such transaction, except the sale proceed there is neither any payment transaction on account of any franchise fees n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no right to sell the goods to anyone else. 9. Excise duty is paid on the value at which appellants sell the goods to customers. They have paid sales tax on the whole value of goods charged from the customers. 10. They argue that if an activity is sale that activity cannot be service also. They submit that as per their books of accounts there are no receipts other than as sale of goods that is to say there are no entries for receipt of any franchise fees. 11. They rely on the decision of the Tribunal in AIA Engineering Ltd Vs . CCE -2010 (19) STR 257 (Tri- Ahmd ) and argue that no service tax is payable in such situations. 12. The Appellants further submit that agreements were executed with only three manufacturers and it is totally u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nchisor, whether or not a trademark, service mark, trade name or logo or any such of symbol, as the case may be, is involved. (ii) The franchisor provide concept of business operation to franchisee, including know-how, method of operation, managerial, expertise, marketing technique or training and standards of quality control except passing on the ownership of all know-how to franchisee; (iii) The franchisee is required to pay to the franchisor, directly to indirectly, a fee; and (iv) The franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person." The Finance Act 2005 has substituted the following definition for expression 'Franchise' w.e.f . 16.6.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave rights to represent the appellants in the transaction. There are far too many cases where the brand name owners get goods manufactured by job-workers with their brand name, purchase the goods from the job-workers and sell the goods to the consumers at a higher price. No service tax is being paid or demanded in such cases. We have not seen any ingredient in the disputed transaction which prima facie calls for a different approach in this case. One difference that we see is that the excise duty is being paid on the value at which goods are sold by the appellants to the customers. In fact this factor is in favour of the case made out by the Appellants. Further at this stage of stay petition we also take note of the argument regarding reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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