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TMI Blog2016 (1) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... - Held that:- service tax on IPR service is exempt only to the extent of the R 9,97,608/- is sustainable on merit. Cenvat Credit - Held that:- Adjudicating authority is only bound by the orders of the superior adjudicating authority like CESTAT and the observations of the Committee of Chief Commissioners are of administrative nature and not of quasi-judicial nature to have any binding effect on adjudicating authority. Thus there is no doubt that even in the opinion of the adjudicating authority, component of demand confirmed on account of non-maintenance of separate accounts of taxable and exempted services is not sustainable. Extended period of limitation - It is seen that the components of demand on technology transfer and with regard to R&D cess were the subject matter of an earlier show cause notice dated 17.10.2008 issued to the appellant covering an earlier period 2005-06 & 2006-07 - the extended period in the present case is not invocable which will make these components of the impugned demand time-barred because the show cause notice was issued on 05/04/2010 for the period up to March 2008. Demand set aside - Decided in favor of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period of 2007-08 was not admissible. 4. The appellant has contended that: (i) The impugned order is based on non-application of mind. It does not specify what were exempted services rendered by it. (ii) While confirming the demand under intellectual property rights service the Commissioner did not give any finding on the various submissions of the appellant. (iii) The technology transfer fee was paid to Whirlpool USA for receiving technical know-how which is not covered in the taxable category of intellectual property rights service. (iv) Commissioner did not take into account that the benefit of notification 17/2004 - ST was admissible in respect of R&D cess paid on technical transfer fee. (v) Extended period is not invocable as there was no suppression or wilful misstatement and there is no finding that there was any wilful mis-statement or suppression with intent to evade service tax. (vi) An order passed without taking into account the contentions of the appellant is bad in law as has been held in the case of CCE Vs. Sheetal International - 2010 (259) ELT 165 (Supreme Court). (vii) The appellant was not providing any exempted services and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h sides. As regards the component of demand pertaining to excess utilisation of CENVAT credit (beyond 20%) on the ground that the appellant provided taxable as well exempted services and did not maintain separate accounts, and therefore utilisation of CENVAT credit to the extent of ₹ 22,29,753/- was in excess of what was permitted in terms of Rule 6 of the CENVAT Credit Rules 2004, the appellant has vehemently pleaded that it was not providing any exempted service at all and no such service has been identified in the show cause notice which we find is borne out from the perusal of the show cause notice. We find that the copy of the ST-3 return (on P-126 of appeal papers) submitted by the appellant shows that it was not providing any exempted service. The contention of ld. DR that the ST-3 returns referred to in the show cause notice (page 168 of the appeal papers) are different from the ST 3 return referred to by the appellant, the appellant maintained that it was not providing any exempted service and the Revenue could not show copies of the ST3 returns referred to in the show cause notice to substantiate its contention. We may however hasten to add that an ST -3 return cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istance pertaining to products so as to allow the appellant to design, manufacture and service products, parts or subassemblies therefor and to have appellants parts suppliers make parts or subassemblies for appellant to be assembled into products. Articles 1, II and III and VII of the said agreement are reproduced below for convenience: ARTICLE 1 "6. The term 'Technical Assistance' shall mean the supply by WHIRLPOOL to WOI of specific information and services relating to a Product based on the Technology supplied under Article II so as to allow WOI to design, manufacture and service such appliance or sub-assembly, and to have the WOI parts suppliers make Parts or Sub-Assemblies, therefore, Technical Assistance includes, but is not limited to, the items set forth in EXHIBIT B attached hereto. 7. The term "Technology" shall mean all of; the state of the art information and data or rights to such information and data, whether patented or unpatented, relating to the design, manufacture and service of the Products, originating within WHIRPOOLs organization as a result of research and product/process development activities. Technology includes, but is not limited to, all patents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total amount of the royalties due, shall be delivered to WHIRLPOOL within forty five (45) days from the end of the quarter covered by such statement. 8.3 WOI shall, during the term of this Agreement and for one year after expiration or termination hereof, maintain accurate records in the English language containing all data reasonably necessary to enable WHIRLPOOL to determine the total quantity of Products manufactured and sold and the sale price thereof, WOI shall permit a duly authorised representative or Chartered Accountant, appointed by WHIRLPOOL, at its cost, to inspect the said books and records and make copies of extracts therefrom during regular business hours. 8.4 All payments under this Agreement shall be made to WHIRLPOOL in United States Dollars at such place as may be designated by WHIRLPOOL from time to time. WOI shall apply to the Reserve Bank/Authorised Dealer in Foreign Exchange for permission to remit the sums due to WHIRLPOOL as soon as possible and shall pursue all such applications diligently." It is evident that the agreement is entered for the purpose of supply of technology/technical assistance/information by Whirlpool, USA to the appellant and the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase is covered. The Commissioner has confirmed the demand under intellectual property rights service essentially by observing as under: "A reading of the Technical Transfer Agreement between the Noticee and Whirlpool, USA with a reading of the above mentioned definitions clearly establishes that Technical Transfer Fee is eligible to Service Tax under "Intellectual Property Service" and accordingly Service Tax on the same is recoverable from the Noticee." As is evident, the Commissioner has not taken into account the contentions of the appellant and has come to summary conclusion that technology transfer fee is liable to service tax under Intellectual Property Service. We find it totally nonspeaking and devoid of any reasoning. In the case of Tata Consultancy Services Vs. Commercial Service Tax - 2015 - TIOL - 2370 - CESTAT - Mumbai it was held by CESTAT that intellectual property rights not covered by the Indian laws would not be covered under taxable service in the category of IP services. In the case of Thermax Ltd. Vs. Commissioner of Central Excise Pune - 2013 - TIOL - 1092 - CESTAT - Mumbai it was held that payment for use of trade secret is not covered within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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