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TMI Blog2008 (9) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... OF 2008 - Dated:- 5-9-2008 - P. Karthikeyan, Member (Technical) M. Saravanan for the Appellant. V.V. Hariharan for the Respondent. ORDER 1. The impugned order sustained demand of service tax of Rs. 53,615 from M/s. Day International Inc., USA (Day International) under the category of "Consulting Engineer" and penalty imposed on it under sections 75, 75A, 76 and 77 of the Finance Act, 1994 (the Act). The Commissioner (Appeals) also confirmed the demand of interest on the service tax demanded. 2. The facts of the case are that Day International manufacture textile machinery and parts. Day International entered into an agreement with M/s. Lakshmi Machine Works (LMW) for manufacture cots and aprons (components of ring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to use the trade name and the right to manufacture would not fall under "Consulting Engineer Service" in the light of the decision of the Tribunal in Navinon Ltd v. CCE [2007] 6 STT 411 (Mum.-CESTAT) and Bajaj Auto Ltd. v. CCE C [2005] 1 STT 83 (Mum. -CESTAT). Day International was compensated for parting with the technical know-how, sharing the trade name and right to manufacture the licensed products and the various activities constituting Consulting Engineer Service by paying royalty at the rate of 3 per cent of the sale proceeds of the licensed product. In the absence of break-up among the activities found to be taxable and not taxable under Consulting Engineer Service, the Commissioner (Appeals) demanded tax on the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical knowledge to modify the existing machinery of LMW suitable for manufacture of licensed product, know-how for their manufacture, right to use brand of Day International and to sell the products. The package also included the training of LMW personnel. In the application of technical knowledge received from the foreign collaborator the royalty payment is recognized as a share of the profit earned through the use of the technical know-how, expertise and technical advice, training in marketing of LMW staff etc. This payment of royalty is not for any service received by LMW. The Commissioner (Appeals) has tried to separate relatively less important activities undertaken by Day International such as assistance of the foreign collaborator in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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