TMI Blog2016 (1) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Section 3 of the R&D Cess Act, 1986 in relation to such intellectual property service (emphasis added). It is admitted that no service tax was paid under IPR service on the amount paid for such technology transfer which means that the appellant also was of the view that such technology transfer was not in relation to IPR service. Indeed in the preceding para, it is held that such technology transfer is not covered under IPR service. Consequently, the appellant was not eligible to deduct the R&D cess it paid on technology transfer from the service tax payable under IPR service as such technology transfer was not in relation to intellectual property service. Thus the component of impugned demand amounting to ₹ 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 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed excess CENVAT Credit during the period of April, 2007 to March 2008 and is liable to pay the excess amount of credit taken as per the provision of Rule 14 of CCR read with Section 73 of the Act, based for the following reasons: a. That the Appellant is providing taxable as well as exempted services and has not maintained separate accounts for dutiable and exempted services. b. The exception provided under Rule 6(6) of the CCR is not applicable in case services are cleared for export under the Export of Services Rules, 2005. c. The Appellant is not authorised to avail credit of more than 20% of Service Tax payable on taxable services for the period April 207 to March 2008. (iii) The deduction of R D cess by the Appellant from service tax paid on brand fee under IPR services 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of demand, Revenue was already aware of the facts. The appellant cited several judgements in support of its proposition which will be duly adverted to in due course. 5. Ld. Department representative contended that: (1) In the ST 3 returns filed by the appellant for the period April 2007 to September 2007 and October 2007 to March 2008 it mentioned to be providing taxable service as well as exempted service. (2) Services exported are to be treated in exempted services. (3) Technology transfer agreement is enforceable under the Indian law (contract act) and therefore would be covered under IP service. (4) R D cess paid in respect of technology transfer fee cannot be offset against the service tax paid under intellectual property rights service on the brand fees paid by the appellant. 6. We have considered the contentions of both 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Review Committee of Chief Commissioners. 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. 7. As regards the demand under IPR service on technology transfer fee, we have perused the agreement relating thereto entered into between Whirlpool Corporation USA and the appellant. The agreement is available on pages 15 to 18 of the appeal papers. It is evident from the agreement that it is only for the purpose of technical assistance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall accrue, when the Products are billed by WOI, if any Products are sold by WOI to any affiliated or related persons, then the royalties payable hereunder shall be computed on the basis of prices charged to purchasers who are not so related or affiliated. There shall be no separate charge for parts or sub-assemblies included in a finished appliances product subject to the above royalty. 8.2 The royalties shall be calculated and paid quarterly, WOI shall prepare statements for each quarter ending on the last day of March, June, September and December and each calendar year, setting up out the quantity of the Products sold, the sale price of the products, and the deductions made therefrom for determining the net ex-factory sales price and such other particulars as WHIRLPOOL may reasonably request to enable it to determine and verify the royalties payable to it under this Agreement. Each statement, together with the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an invention, design , product, process, technology, book goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the time being in force. As the phrase law for the time being in force implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services. Thus only such intellectual property rights which are covered under Indian law in force alone are chargeable to service tax under IPR service. The Commissioner does not identify any Indian law under which the technology transfer and technical assistance involved in this case 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer was not in relation to IPR service. Indeed in the preceding para, it is held that such technology transfer is not covered under IPR service. Consequently, the appellant was not eligible to deduct the R D cess it paid on technology transfer from the service tax payable under IPR service as such technology transfer was not in relation to intellectual property service. Thus the component of impugned demand amounting to ₹ 9,97,608/- is sustainable on merit. 9. 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 and therefore in the light of the judgements of Supreme Court in the case of Nizam Sugar factory - 2006 (197) ELT 465 (SC) and Pushpam Pharmaceutical Company Vs. CCE, Bombay 1995 (78) ELT 401 (SC) 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. 10. In the light of the foregoing analysis, we do not find impugned demand s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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