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2017 (9) TMI 1325

Intellectual property service - Technical Collaboration Agreement - the appellant would manufacture their product in India using Technical information, know-how and Patent rights of M/s.SICPA Holding Switzerland - demand of Service tax on Right to use Technical information - Held that: - identical issue came up before the Tribunal in the case of Reliance Industries Ltd. v. CCE & ST, LTU, Mumbai [2016 (6) TMI 1108 - CESTAT MUMBAI], where it was held that If an intangible property right was to ref .....

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2015. 3. The facts of the case in brief are that the appellant are engaged in the manufacture of printing inks falling under Chapter 32 of CETA, 1985. From the Technical Collaboration Agreement between the appellant (licensee) and M/s.SICPA Holding Switzerland (licensor), the Department came to know that the appellant would manufacture their product in India using Technical information, know-how and Patent rights of M/s.SICPA Holding Switzerland. As per Articles 6.1 and 6.2 of the Agreement, th .....

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ons of Finance Act, 1994. The learned Commissioner confirmed the demand in the show-cause notice and imposed penalties under various provisions of Finance Act, 1994. 4.1 The contention of the appellant is that in the instant case, the appellant had entered into the Agreement dated 17.01.1991 with SICPA Holding Switzerland to obtain know-how, technical information and assistance from SICPA Holding Switzerland for the manufacture of its products. 4.2 The contention of the appellant is that no pate .....

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contention of the appellant is that the transfer of know-how and technical information does not fall under the category of Intellectual Property service , as defined under Section 65(55b) of the Finance Act, 1994. 4.4 The contention of the appellant is that the definition of taxable service includes only such Intellectual Property Rights that are prescribed under the Indian law for the time being in force. 4.5 The contention is that the transfer of know-how is a transaction in property and not a .....

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that date. Therefore, this transaction cannot be taxed as an Intellectual Property Service under Section 65(55b) read with 65(105(zzr) of the Finance Act, 1994, as the Intellectual Property Service was brought within service tax net w.e.f. 10.09.2004. 4.8 The appellant placed reliance on the Tribunal s decision in the case of Modi-Mundipharma Pvt.Ltd. v. Commissioner of Central Excise, Meerut reported in 2009 (15) STR 713 (Tri.-Del.). 4.9 The contention of the appellant is that no service tax is .....

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is revenue neutral. 4.11 The contention of the appellant is that the service provider is situated outside India and they did not have any office in India. Hence, in view of the decision of the Hon ble Bombay High Court in the case of Indian National Shipowners Association vs. UOI, 2009 (013) STR-0235-Bom., which was later on, upheld by the Hon ble Apex Court, appellant are liable to pay Service Tax before 18.04.2006. 5. Rebutting the contention of the appellant that no liability of service tax a .....

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the appellant is liable to service tax on the services given by SICPA Holding Switzerland to the appellant. It is also the contention of the learned counsel for the department that the transfer of know-how as per the Technical Agreement was not on one time basis but was on continual basis, and was to be transmitted to enable the appellant to manufacture the products on continual basis. In so far as the contention of the appellant that they are entitled to abatement for the R. & D. Cess paid .....

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ance Industries Ltd. v. CCE & ST, LTU, Mumbai [2016 (44) S.T.R. 82 (Tri.-Mumbai). The relevant portion of the said judgement is reproduced below:- 6.While deciding this we have to bear in mind that India is a signatory to the Paris Convention for the Protection of Industrial Properties. The said convention was the first major step taken to help creators of intellectual property to ensure that their intellectual works were protected in other countries. In furtherance to the same a Patent Coop .....

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ntry, then the legislature would not have used the expression under any law for the time being in force . The legislature would have merely stated that an Intellectual Property Right would mean any right to an intangible property. There would have been no need for it to qualify the same with a recognition under any law for the time being in force. 7. Further the issue came up before the Tribunal in the case of Chambal Fertilizers & Chemicals Ltd. v. CCE, Jaipur-I [2016 (45) S.T.R. 118 (Tri.- .....

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person by the holder of intellectual property right, in relation to intellectual property service; Section 65(55a) of the Act defines Intellectual Property Right to mean as under : Intellectual Property Right means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright 6. The IPR as defined should be a right under any law for the time being in force. The legal pos .....

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service for tax liability on reverse charge basis. 8. In view of the settled legal position as held in various decisions of the Tribunal discussed above, we find that impugned order is without merits and accordingly set aside the same. The appeal is allowed. 8. During the course of argument, ld.Counsel for the department has submitted that the matter has reached to the Supreme Court in the case of Commissioner v. Reliance Industries Ltd. [2017 (51) S.T.R. J187 (SC)], where the appeal has been ad .....

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