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M/s. Avtec Ltd. Versus CCE & ST, Chennai-III

2017 (8) TMI 1054 - CESTAT CHENNAI

Classification of services - the appellants had entered into agreement with M/s. General Motors and as per the agreement, they have to pay royalty @ 3% on local sales and 7.5% on export sales of the equipment/parts manufactured and sold - The department is of the view that such payment is royalty charges paid for technical know-how and would fall under IPR services - reverse charge mechanism - whether the service is to be classified under Intellectual Property Right Services or otherwise? - Held .....

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avor of appellant. - ST/626/2009 - 41704/2017 - Dated:- 11-8-2017 - Ms. Sulekha Beevi, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri T.R. Ramesh, Advocate for the appellant Shri K.P. Muralidharan, AC (AR) for the respondent ORDER Per: Bench Brief facts are that the appellants are manufacturers of Power Shift Transaction and Parts thereof under technical collaboration with M/s. Allison Transmission, USA. On scrutiny of records it was noticed that the appellants had ente .....

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roposing to demand service tax to the tune of ₹ 11,11,395/- under the category of IPR service along with interest and proposing to impose penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalty under Section 76 of the Finance Act, 1994. In appeal, the Commissioner (Appeals) upheld the classification of the services rendered under the category of IPR services but however set aside the demand on the ground that the period being prior to .....

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appellant, Ld. Counsel, Shri T.R. Ramesh adverted to the various clauses of the agreement entered with M/s. General Motors, USA. He submitted that the agreement was entered on 02.18.1981. As per the agreement clause 2, M/s. GM, USA has to furnish to the appellant, technical information on licensed components and licensed products. It is also provided that GM, USA has to provide product service information and identification listings of basic manufacturing and inspection equipment. That such inf .....

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category. He adverted to amendment of the agreement dated 15.10.1997 and submitted that as per clause 4.1(b) of the amendment, it is stated that this agreement does not include any sale, transfer or assignment of any patents'. For this reason also, the royalty paid would not fall under IPR services. He relied upon the decision in the case of Saint-Gobain Gyproc India Ltd. Vs. CCE Rohtak - 2015 (38) STR 1092 (Tri.-Del.). 3. The Ld. AR, Shri K.P. Muralidharan, AC, reiterated the findings in t .....

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for furnishing technical information/technical know-how. In clause 2.3, the payments to be made for the technical know-how are also stated. It is seen that payments are made in a few instalments and the last 1/3rd of the payment is to be made within 30 days of commercial production of that series. Clause 3 speaks about technical assistance to be furnished by GM. Royalty is paid for technical assistance. Clause 3.1 states that during the period of licence, GM shall assign an English speaking repr .....

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Gyproc India Ltd. (supra). The relevant portion is reproduced as under:- 5. We have considered the submissions from both the sides and perused the records. The Service Tax is sought to be demanded on the amount being paid by the appellant to BPB, UK in terms of Article 8.2 of their agreement with them. While in terms of the Article 8.1 of the Agreement, the appellant were required to pay a lump sum amount of # 400000 as consideration for technical knowhow provided, within a specified period and .....

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