TMI Blog2018 (5) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of Techn0104' Transfer Fee for the purpose of Casting Specialty Alloy. Extended period of limitation - Held that: - the appellant has claimed that its unit at Ranjangaon is entitled to CENVAT Credit of the duty paid at Mundhwa unit. The said claim has not been contested by the Revenue - extended period cannot be upheld. Penalty u/s 11AC - Held that: - In view of the fact that no allegation of suppression/misdeclaration can be upheld, the penalty under Section 11AC is set aside. Appeal allowed. - E/921/2007 & E/403/2008 - A/86016-86017/2018 - Dated:- 13-4-2018 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri M.H. Patil, Advocate, For Appellant Shri A.B. Kulgod, Asstt. Commissioner (Ar), For Respondent Per: Raju These appeals have been filed by the Revenue as well as the assessee namely, M/S Kalyani Carpenter Special Steels Ltd. (KCSSL in short). M/S KCCSL are in appeal against Order-in-Appeal dated 16003.2007, wherein the commissioner (Appeals) has unhelp the order of the original adjudicating authority seeking to include the running royalty in the assessable value of the goods. Revenue is in appeal against order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that running royalty is not includible in the assessable value. It has been argued that Commissioner (Appeals) has erroneously held that the goods transferred from Mundhwa unit to Ranjangaon unit are not marketable in the condition in which they are transferred and therefore, no royalty are payable to Collaborator in respect of these clearances. Revenue has also raised the issue that M/s KCSSL had. debited the amount of duty in their CENVAT account, however, during the month of May to November, 2005 they did not have that balance in their account. Consequently, they were required to pay an amount of ₹ 9,56,332/- in cash. 4.1 Learned AR argued that no distinction can be made in the agreement regarding goods manufactured in the Mundhwa factory, in so far as payment of running royalty is concerned. He argued that the contention of the learned Commissioner (Appeals) that royalty was paid on market expenses is not tenable. He argued that royalty was paid for the techn010U transfer and therefore, would be applicable to the entire manufacturing process. 5. We have gone through the rival submissions. We find that there are two orders of Commissioner (Appeals), which are diago ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted alloy grades, which will be licensed in the agreement. Thus, it is apparent that the technology transfer is used at the stage of casting. In other words, the products manufactured in Mundhwa unit namely, Bloom and Bars, being casting product already contained the technology transfer in the shape of specialty alloy. Thus it is apparent that the transferred technology is contained in the intermediate product cleared by the Mundhwa unit. In this regard, Revenue has relied on the decision of the Tribunal in the case of Century Enka Ltd. vide Order No. A/86069-86071/17/EB dated 27.22017, wherein after examining the CAS-4 and CAS-I guidelines, following has been observed: - 6. We find that first issue that needs to be decided is if the royalty is includible in value for the purpose of computation under CAS-4. In CAS 1 guidelines following has been provided: 6.3.11 Research Development Costs are the cost for undertaking research to improve quality of a present product or improve process of manufacture, develop a new product, market research etc and commercialization thereof. 6.3.12 Research Cost comprises the cost of development of new product and manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raveling expenses for sales personnel advertisement cost Legal expenses for debt realization market research cost royalty on sale after sales service cost etc It can be seen that differentiation has been made in respect to royalty paid for the product and royalty on sale. Royalty paid for the product would be royalty in respect of technical know how and the technology involved and drawing of the product whereas royalty on sale would be royalty in respect of brand name or trade name associated with the product. In terms of CAS-4 para 5.3. prescribed as under: Direct Expenses Direct expenses are the expenses other than direct material cost and direct employees costs which can be identified with the product. Direct expenses include: Cost of utilities such as fuel, power, water, steam etc Royalty based on production Technical Assistance / know -how fees Amortized cost of moulds, patterns, patents etc Job charges Hire charges for tools and equipment Charges for a particular product designing etc Thus in terms of CAS-4 royalty of the nature of the technical knowhow is includible in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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