9911796707
TMI Blog2014 (8) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, 1994. 2. The applicant are engaged in the manufacture of printing inks falling under Chapter 32 of CETA, 1985. From the Technical Collaboration Agreement between the applicant (licensee) and M/s. SICPA Holding Switzerland (licensor), the Department came to know that the applicant would manufacture their product in India using Technical information, know-how and Patent rights of M/s. SICPA Holding Switzerland. As per Articles 6.1 and 6.2 of the Agreement, the Noticee would pay a lump-sum of SFr.525000.00 and a royalty of 5% on net sales of all the products and parts thereof, manufactured and/or sold in India by the applicant during the validity period of the Agreement. As per Clause 5.1 of Technical Collaboration Agreement, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of the same being patented. In fact, the very nature of know-how is that it is confidential information which is not put into public domain. The payments made under the Agreement were only for Technical information and know-how received. It is submitted that the technology and know-how shared by SICPA Holding Switzerland with the applicant is confidential information, which is not patented anywhere in the world. It is further submitted that the representation made by the applicant in one of its letters that the technology is patented in Switzerland was on account of bona fide mistake of fact and the applicant humbly confirmed that the technology is nothing but confidential know-how, which is not patented anywhere in the world. 3.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal information and know-how soon after that date. Therefore, this transaction cannot be taxed as an 'Intellectual Property Service' under Section 65(55b) read with Section 65(105)(zzr) of the Finance Act, 1994, as the 'Intellectual Property Service' was brought within service tax net w.e.f. 10-9-2004. 3.8 The applicant placed reliance on the Tribunal's decision in the case of Modi-Mundipharma Pvt. Ltd. v. Commissioner of Central Excise, Meerut reported in 2009 (15) S.T.R. 713 (Tri.-Del.) 3.9 The contention of the applicant is that the no service tax is payable as there was no levy at the time of occurrence of the taxable event at the time of Agreement. In fact, assuming that the transfer of know-how is a service, such transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the applicant and SICPA Holding Switzerland, since the Agreement was for providing technical assistance, the learned AR contended that in view of Article 5 of Technical Collaboration Agreement (page 123 of the Appeal Paper-Book), SICPA Holding Switzerland has granted to the applicant exclusive technical information under all the relevant patents and in view of that, Royalty of 5 per cent on the net sale of all the products was to be paid. Article-7 of the said Agreement clearly states that the licensee will be given right to patents in India in respect of the products on payment of Royalty. As regards the contention of the applicant that no patents are registered in India, the learned AR also submitted that Switzerland being a notifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t time-barred. 5. Prima facie, we find that in view of Article 5 of Technical Collaboration Agreement (page 123 of the Appeal Paper-Book), SICPA Holding Switzerland has granted to the applicant exclusive technical information under all the relevant patents and in view of that royalty of 5 per cent on the net sale of all the products was agreed to be paid. We also find that Article-7 of the said Agreement dearly states that the licensee would be given right to patents in India in respect of the products on payment of royalty. Prima facie, we also find that the fact that Switzerland is a notifying country under Section 133 of the Patents Act, 1970 for the purposes of patents, itself shows that substantial protection under the Patents Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1.94 crore (approx.). In these circumstances, we find that applicant are not able to make out a prima facie case for total waiver of pre-deposit of the Service Tax and the penalties. The applicant pleaded for financial hardship, but they did not produce any evidence to substantiate the said plea. The Hon'ble High Court of Andhra Pradesh in the case of CCE, Guntur v. Sri Chaitanya Educational Committee, 2011 (22) S.T.R. 135 (A.P.), held that the balance of convenience has to be seen. We find that the balance of convenience is in favour of the Department. In these circumstances, the applicant are directed to make a pre-deposit of 25% of the Service Tax amount of Rs. 1.62 crore, that is Rs. 40,50,000/- (Rupees forty lakh and fifty thousa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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