TMI Blog2018 (10) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... ess condition to pay for the license know how while purchasing the goods but there is an implicit condition in the facts of the case as the goods cannot be used without a license to use the technology in built into it. Thus, relying on the decision of Hon ble Apex Court in the case of Essar Gujarat Ltd. the appeal not maintainable on merit. Revenue neutrality - Held that:- The credit would not be available immediately but over a period as the goods are not inputs but capital goods. Thus, this does not result in an revenue neutral situation. Moreover, the liability to pay would arise at the time of import but the said credit can be used only after the plant is installed and production starts. Thus, it is not a revenue neutral situation. Appeal dismissed - decided against appellant. - C/10703/2014-DB - Final Order No. A /12217/2018 - Dated:- 22-10-2018 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) For Appellant: Shri. T.Vishwanathan, Manish Jain Ms Shruti Agarwal (Adv.) For Respondent: Shri. Jitesh Nagori (A.R.) ORDER Per: Raju This appeal has been filed by the M/s. Aditya Birla Nuvo Ltd. against confirmation of demand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable as Cenvat Credit to the appellant and in such circumstances demand of duty cannot be confirmed. He relied on the following case law in this regard. a) Commissioner Vs. Narmada Chematur Pharmaceuticals 2005 (179) ELT 276 (SC) b) Punjab Tractors Ltd. Vs. CCE 2005 (181) ELT 0380 (SC) c) CCE C (Appeals) Vs. Narayan Polyplast 2005 (179) ELT 20 (SC) d) CCE Vs. Textile Corporation 2008 (231) ELT 195 (SC) e) CCE Vs. Jamshedpur Beverages 2007 (214) ELT 321 (SC) f) CCE VS. Coca Cola India (Pvt.) Ltd. 2007 (213) ELT 490 (SC) 3. Ld. AR relies on the impugned order. He also took us through various provisions of the agreement essentially Article 2 and Article 4 of the agreement. He argued that the said payment is not merely for the documents but also a licensing to manufacturer using the said machinery /technology. 4. We have gone through the rival submissions. We find that the agreement between International Chemical Investors and the appellant has following notable ingredients. This know how license Agreement is made on June 7, 2011 by and between: INTERNATIONAL CHEMICAL INVESTORS IV.S.A., a company validly existing under the laws of the Grand Duchy of Lu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and of which Licensor has the right to dispose, relating to the spinning plant involved in production of VFY, in form, language and detail as such Know-How is incorporated in the Technical Documentation; The Know-How shall relate to one or more items as follows: 1) The floor plans setting out the foundations and supply connections, including all existing documents of Licensor relating to PFD s, PID s, equipment layout, piping layout, and single line diagrams, as described in detail in Item I of Appendix 1.17; 2) Basic design and process Know-How as described in detail in Item II of Appendix 1.17; and 3) Chemical and physical process parameters of VFY as set out in Item III of Appendix 1.17; The above describes the nature of know-how. The know-how consists of Licensor s Technology Knowledge, Information, data and technical documentation in licensor s possession and of which licensor has the right to dispose. From the above it is apparent that know-how consists of not only the manner in which the factory is to be set up but also basic design and process know-how as well as physical chemical and process parameters. Thus, the know-how consists of the entire technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w license and rights . 4.1 Know How License Subject to Article 4.3, Licensor agrees to grant and hereby grants, on a sole and exclusive basis within the Territory, and subject to Article 2.2, to Licensee a perpetual, irrevocable non-transferable license to use the Know-How made available to License pursuant to this Agreement in the Territory, solely for the purpose of (a) Manufacturing products at the IR Sites. (b) Selling such products within the Territories. ( Know How License ) 4.2 Restriction to IR Site The use of Licensor s Know-How and the right to manufacture Products shall be restricted to operation on the IR Site. Licensee shall be able to make use of Licensor s Know How and have the right to manufacture Products in places within the Territory other than the IR Site in accordance with the terms and conditions of this Agreement, provided that Licensor s right and interests, in particular, but not limited to, the timing of the payment of Royalty Instalments, and of royalty instalments under the Trademark License Agreement, will under no circumstances become negatively affected thereby. 4.3 Licensor and Licensee agree that the Kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Technology thus while granting the license to the appellant to use the technology, any license given to any other person in the territory to use the said pathology would be withdrawn. Article 12 of the agreement relates to duration and termination, it clearly prescribes that the agreement shall remain effective only until its termination. From this also it is very clear that the agreement is for transfer of right to use the technology and not for sale of know-how. 8. In light of above now we examine the defence of the appellant. The primary defence of the appellant is that technology know-how is merely documentation which has been imported as goods and should be assessed as goods. From the above examination of two agreements it is apparent that the technology know-how license agreement is essentially an agreement that permits the appellant to use the Spool Technology (VFY). The machinery imported by them is essentially a machinery which uses Spool Technology and the said machine cannot be used without a license to use the said Spool Technology . In these circumstances, it is apparent that the facts of the case are identical to the facts of the case in of M/s Essar Gujarat Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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