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TMI Blog2015 (5) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... 006 to October 2007 the appellant assessee had paid an amount to the foreign based firm which would get classified as services on which liability to pay tax arises. Coming to such a conclusion, show cause notice dated 11 March 2008 was issued directing the appellant assessee to show cause as to why service tax liability be not demanded under the category of intellectual property services as defined under section 65 (55b) as the services rendered by the foreign firm was for rendering technical assistance from an individual. Appellant assessee contested at the show cause notice on merits as also on the limitation. The adjudicating authority granted an opportunity of personal hearing which was availed. Before the adjudicating authority issued an order, there was a change in the authority. The revenue authorities issued addendum to show cause notice dated 13th October 2008. Appellant contested the said addendum. The adjudicating authority after considering the submissions made during the personal hearing, confirmed the demands raised with interest within the limitation period under the category of 'Scientific and Technical Consultancy Service' and dropped the demands beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he very same agreement. It is his submission that by virtue of the said agreement technical assistance was provided by the foreign-based company to the appellant-assessee for manufacturing of fighter aircraft. It is his submission that the scope of the agreement is very clear inasmuch as that the agreement provides for visit of technical personnel to the appellant's manufacturing facility and help in creating the facility for manufacturing as per the agreement. It is his submission that the adjudicating authority has correctly come to a conclusion that the agreement provides for transfer of licence which includes formula, process, design, data and other relevant particulars. It is his submission that the adjudicating authority has incorrectly dropped the proceedings of the demands which are beyond the period of limitation as the appellant assessee did not produce the agreement before the authority to come to a conclusion and hence revenue's appeal be allowed and the demands be confirmed for the entire period. 6. We have considered the submissions made at length by both sides and perused the records. 7.1 We find that the issue involved is regarding the discharge of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consultancy, or scientific or technical assistance has to be rendered by any science or technology institution or organisation. On perusal of the status of "Rosonbornexport" we find that the said status indicates the foreign-based company as a joint-stock company, part of the Russian technologies state Corporation which is responsible for import/export of the full range of defence and Dual use end products, technologies and services. It is also noted that the said "Rosonbornexport" only has the right to supply the world market with a full range of arms and military equipments manufactured by the Russian defence industrial complex and approval; the said foreign company is one of the major operators in the world market for arms and military equipments. It is also indicated that the official status of "Rosonbornexport" is an exclusive state intermediary agency and provides guaranteed state support of all export import operations. The said status of the "Rosonbornexport" indicates that it is neither science or technology institution or organisation. In our considered view, the definition of "scientific and technical consultancy services" may not be applicable in the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f know-how for manufacture of bulk drug against payment of Rs. 20 crores and transfer of technical know-how to make tablets (formulations) against payment of Rs. 5 crores. None of these transactions can be conceptually reduced to mere advice, consultancy or scientific/technical assistance. On the other hand, they involve permanent transfer of intellectual property in one form or another and are presently covered by "intellectual property service". The ld. JCDRs "essential character test" is not applicable as the service is classifiable only under one sub-clause of clause (105) of Section 65 of the Act, which is sub-clause (zzr). Each agreement covered the transfer of an intellectual property and, therefore, a combination of the agreements (which was envisaged by JCDR as "package deal") would not make any difference. This rules out the applicability of Andhra Petrochemicals (supra). Moreover, the appellant-company cannot be said to be a science or technology institution or organization. Even medical colleges, hospitals or diagnostic/pathological laboratories have not been recognized by the department as science or technology institutions or organizations vide M.F. (D.R.) Letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue in favour of the appellants. We re-produce the paragraph 6: "6. We have carefully considered the submissions from both sides. We also perused the agreement and the show cause notice. In the show cause notice it is alleged that the appellant was granted exclusive right to manufacture, use and sell within the territory, the preparation utilizing the know how and scientific and technical information and the teachings of the patents on payment of royalty. It is also alleged in the show cause notice that the appellant was receiving know-how during the disputed period. However, from the agreement it is noticed that there is no evidence of continuous providing of information, know-how in relation to the manufacture. Further, it is not disputed that the appellant was manufacturing and selling products in the brand names, Pyricontin, Diacontin, Fecontin, Metocontin, Morcontin, Nitrocontin, & Unicontin which are claimed to be registered brand names of the appellant company. In other words, they are not using the brand name of Mundipharma A.G. Switzerland. Receipt of know-how appears to be a one time affair. There is no evidence that their know-how is supplemented by Mundipharma A.G. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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