TMI Blog2015 (5) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... (D.R.) Letter dated 9-7-2001 ibid. In the show-cause notice itself, the appellant-company was held out to be manufacturer of excisable goods only. It was not even alleged that it was a science or technology institution or organization. Even assuming that M/s. Kopran Research Laboratories Ltd. are a science or technology organization wholly owned by the appellant-company and that their R&D activities are financially supported by the appellant-company, we are not inclined to deem the latter to be a science or technology institution or organization. The two companies are distinct legal entities and, therefore, the functional character of one cannot be claimed by, nor infused into, the other. Revenue has not alleged and established that the appellant-company provided advice, consultancy or scientific or technical assistance to Cadila in any specific discipline of science or technology. In the result, the argument of the counsel that the service rendered by the appellant-company to Cadila under the relevant agreements cannot constitute "scientific or technical consultancy" as defined under Section 65 of the Finance Act, 1994 merits acceptance. - Further, in yet another case R.M. Dha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;Scientific and Technical Consultancy Service' and dropped the demands beyond the limitation period. Adjudicating authority did not impose any penalty. The assessee is aggrieved by the demand of the service tax liability and interest thereof while revenue is aggrieved by the adjudicating authority has dropped the demand's which are beyond the limitation period. 3. Heard both sides and perused the records. 4. Learner Chartered Accountant appearing on behalf of the appellant assessee takes us through the entire case records. It is his submission that addendum issued by the revenue is incorrect inasmuch as that the said addendum was issued after considering the written submissions made by the appellant assessee. It is his submission that revenue is trying to improve upon that case after considering the defence raised by the assessee. On merits, it is his submission that the contract entered by the appellant assessee is on behalf of the Republic of India for the supply and transfer of licence for production of fighter aircraft, engines, air borne equipments. The said agreement was entered on 28 December 2000 accordingly, appellant assessee paid the amounts to the forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the records. 7.1 We find that the issue involved is regarding the discharge of service tax liability on the reverse charge mechanism for the services rendered by order Rosonbornexport in pursuance of an agreement entered for licence technical documentation for production of fighter aircraft. Revenue authorities have classified the said services rendered under the category of scientific and technical consultancy services . The adjudicating authority has considered the agreement between appellant assessee and the foreign-based company. 7.2 In order to appreciate the correct position we need to consider the agreement entered by the appellant assessee who is a government of India organisation engaged in the manufacturing of defence-related equipments. ON perusal of the agreement, we find that the said agreement is for transfer of licence technical documentation for the manufacture of fighter aircraft in appellant assessee's facility. As the agreement being confidential and secret, we are not reproducing any of the articles in this order. Suffice to say that on perusal of said agreement we find that the agreement is for transfer of technology for the manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of scientific and technical consultancy services may not be applicable in the facts and circumstances of this case. Revenue has not brought on record any evidence to contradict the submissions of the appellant assessee. In the absence of any contrary evidence we have to hold that Rosonbornexport is not a science or technology institution or organisation which gives any advise, consultancy or technical assistance in one or more discipline of science or technology. Our view is fortified by the judgment and order of the Tribunal in the case of Kopran Limited (supra). The relevant paragraphs are reproduced: 5. After giving careful consideration to the submissions, we have found valid points in the submissions of the counsel. The issue debated before us revolves around the definition of scientific or technical consultancy under Section 65 of the Finance Act, 1994. This definition reads thus :- 'Scientific or technical consultancy' means any advice, consultancy or scientific or technical assistance rendered in any manner, either directly or indirectly, by a scientist or a technocrat or any science or technology institution or organization, to a client, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atories have not been recognized by the department as science or technology institutions or organizations vide M.F. (D.R.) Letter dated 9-7-2001 ibid. In the show-cause notice itself, the appellant-company was held out to be manufacturer of excisable goods only. It was not even alleged that it was a science or technology institution or organization. Even assuming that M/s. Kopran Research Laboratories Ltd. are a science or technology organization wholly owned by the appellant-company and that their R D activities are financially supported by the appellant-company, we are not inclined to deem the latter to be a science or technology institution or organization. The two companies are distinct legal entities and, therefore, the functional character of one cannot be claimed by, nor infused into, the other. The submissions made in this context by the learned JCDR seemed to suggest that the doctrine of lifting of corporate veil was being invoked. In our view, this doctrine is not applicable to the facts of this case. As rightly submitted by the learned counsel, the Revenue has not alleged and established that the appellant-company provided advice, consultancy or scientific or technical a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itzerland. 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. Switzerland. Therefore, we are in agreement with the submissions on behalf of the appellant that royalty payment in the form of deferred payment for know-how received in 1990. Whether payment for such services rendered is made in one lump sum or made in instalments or based on quantum of sales by the appellant on an annual basis is not relevant to consider as to when the services were actually rendered. From the available evidences on record, we accept the submission of the learned Sr. Advocate that the services were rendered in 1990 and for the said services payments were being made periodically as provided in the agreement. 7.6 Further, in yet another case R.M. Dhariwal (HUF) vs. CCE Pune III - ST/233/08-Mum has laid down the same ratio that transfer of trade name and formulae transferred for a consideration cannot be services which would fall under Scientific or Technical Consultancy Service . 7.7 The ratio as reproduced above will squarely apply in the facts of the case in hand; accordingly we hold the impugned order is unsustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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