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TMI Blog2017 (9) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 29-8-2017 - Dr. Satish Chandra, President And Shri V.Padmanabhan, Member ( Technical ) Shri Ravi Raghavan, Ms.S.Chatterjee, Advocates Ms. Nivedita Agarwal,C.A. for the Appellant Shri A.Roy, Supdt.(AR) for the Revenue ORDER Per Shri Justice (Dr.) Satish Chandra Both the appeals have been filed against different Orders-in-Original No. 06/COMM/ST/SLG/09-10 dated 25.03.2010 ; 30-38/COMM/ST/SLG/16-17 dated 21.10.2016. 2. The period of dispute is March, 2005 to January, 2015. 3. The facts of the case in brief are that the appellant are engaged in the manufacture of printing inks falling under Chapter 32 of CETA, 1985. From the Technical Collaboration Agreement between the appellant (licensee) and M/s.SICPA Holding Switzerland (licensor), the Department came to know that the appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion does not fall under the category of Intellectual Property service , as defined under Section 65(55b) of the Finance Act, 1994. 4.4 The contention of the appellant is that the definition of taxable service includes only such Intellectual Property Rights that are prescribed under the Indian law for the time being in force. 4.5 The contention is that the transfer of know-how is a transaction in property and not a transaction in service. The contention is that know-how is not an Intellectual Property Right as per Section 65(55a) and hence, the transfer of the same will not fall under the category of Intellectual Property Service in terms of Section 65(55b) of the Finance Act, 1994. 4.6 The contention is that the transaction involving transfer of know-how or technology is a transaction in property and not a service transaction. In the present case, SICPA Holding Switzerland had transferred know-how and technical information and assistance for the manufacture of its products to the appellant. The said know-how was already in the possession and use of SICPA Holding Switzerland, which was transferred to the appellant along with a right to manufacture and sell the product usin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the department 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 appellant 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 appellant that no Patents are registered in India, the learned Counsel for the department submitted that Switzerland being a notifying country under Section 133 of the Patent Acts, 1970 for the purposes of Patents, clearly shows that substantial protection under the Patent s Act was available to the appellant as well, and the appellant is liable to service tax on the services given by SICPA Holding Switzerland to the appellant. It is also the contention of the learned counsel for the department that the transfer of know-how as per the Technical Agreement was not on one time basis but was on continual basis, and was to be transmitted to enable the appellant to manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force, obviously the law being referred to here has to be an Indian Law and not the recognition of the intangible property right under the law of a third country. If an intangible property right was to refer to a right which is recognised by any country, then the legislature would not have used the expression under any law for the time being in force . The legislature would have merely stated that an Intellectual Property Right would mean any right to an intangible property. There would have been no need for it to qualify the same with a recognition under any law for the time being in force. 7. Further the issue came up before the Tribunal in the case of Chambal Fertilizers Chemicals Ltd. v. CCE, Jaipur-I [2016 (45) S.T.R. 118 (Tri.-Del.)]. Relevant portion of the said judgement is reproduced below:- 5. We have heard both sides and examined the appeal records. The only point for decision is that whether or not the appellant received taxable service under the category of Intellectual Property Right service during the relevant period. The admitted facts of the case are that the technical know-how, engineering design licence involved in these agreements with foreign ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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