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M/s. SICPA India Pvt. Ltd. Versus Commissioner of Central Excise, Customs & Service Tax, Siliguri

2017 (9) TMI 1325 - CESTAT KOLKATA

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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7122-77123/2017 - Dated:- 29-8-2017 - Dr. Satish Chandra, President And Shri V.Padmanabhan, Member ( Technical ) Shri Ravi Raghavan, Ms.S.Chatterjee, Advocates & Ms. Nivedita Agarwal,C.A. for the Appellant Shri A.Roy, Supdt.(AR) for the Revenue ORDER Per Shri Justice (Dr.) Satish Chandra Both the appeals have been filed against different Orders-in-Original No. 06/COMM/ST/SLG/09-10 dated 25.03.2010 ; 30-38/COMM/ST/SLG/16-17 dated 21.10.2016. 2. The period of dispute is March, 2005 to January, .....

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e Noticee would pay a lump-sum of SFr.525000.00 and a royalty of 5% on net sales of all the products and parts thereof, manufactured and/or sold in India by the Applicant during the validity period of the Agreement. As per Clause 5.1 of Technical Collaboration, the Applicant have been granted the Right to use Technical information as well as patents of M/s.SICPA Holding Switzerland which the licensor filed or would file for said Technical information. Thereby, the Department came to the conclusi .....

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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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ubmitted that the technology and know-how shared by SICPA Holding Switzerland with the appellant is confidential information, which is not patented anywhere in the world. It is further submitted that the representation made by the appellant in one of its letters that the technology is patented in Switzerland was on account of bona fide mistake of fact and the appellant humbly confirmed that the technology is nothing but confidential know-how, which is not patented anywhere in the world. 4.3 The .....

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transaction in service. The contention is that know-how is not an Intellectual Property Right as per Section 65(55a) and hence, the transfer of the same will not fall under the category of Intellectual Property Service in terms of Section 65(55b) of the Finance Act, 1994. 4.6 The contention is that the transaction involving transfer of know-how or technology is a transaction in property and not a service transaction. In the present case, SICPA Holding Switzerland had transferred know-how and te .....

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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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IPR/know-how is transferred. The appellant further relied on the following judgments in support of the said contention: (i) 20th Century Finance Corpn. Ltd. & Anr. Vs. State of Maharastra 2000 (119) STC 182 (SC); (ii) Bajaj Allianz General Insurance Co.Ltd. vs. CCE, Pune; 2009 (13) STR 159 (Tri.-Bom.) 4.10 The appellant also placed reliance on the Trade Notice issued by the Commissioner of Central Excise, Madurai vide Circular No.43/2008 dated 11.09.2008, submitting that the entire exercise .....

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rises on the Agreement between appellant and SICPA Holding Switzerland, since the Agreement was for providing technical assistance, the ld.Counsel for the department contended that in view of Article 5 of Technical Collaboration Agreement (page 123 of the Appeal Paper-Book), SICPA Holding Switzerland has granted to the appellant exclusive technical information under all the relevant Patents and in view of that, Royalty of 5 per cent on the net sale of all the products was to be paid. Article 7 o .....

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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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ent is that pursuant to the said Agreement in 1991, though they received services six to seven months prior to the levy of Tax on the said services, but they did not register themselves with the department, nor did they pay any Service Tax during the period May, 2005 to March, 2009, which clearly establishes an intention to evade payment of Service Tax and hence, the demand is not time barred. 6. From the records it appears that identical issue has come up before the Tribunal in the case of Reli .....

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eration Treaty, was signed by member countries, the same has been embodied in Chapter XXII of the Patents Act, 1970. The said treaty spells out a detailed mechanism for the filing of international applications by an inventor and provides that once such an application is made and registered in the member country, then the IPR would be protected in that member country. Thus, there appears to be a codified law providing for Recognition and Protection under the Indian Laws even in respect of Patents .....

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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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w. However, the original authority held that registration of IPR under Indian law is only for obtaining protection from its infringement. He observed that the levy of tax is not dependent on the fact of such registration. We find that such conclusion is not legally tenable and is beyond the scope of taxable service as defined in Finance Act, 1994 : Section 65(105)(zzr) of the Act defines in the taxable IPR service tax as under : Taxable service means any service provided or to be provided to any .....

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