TMI Blog2020 (1) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... worker manufacturing IMFL on behalf of the appellant and the amount retained by the appellant is the business profit not liable to be taxed under the Finance Act, 1994 under the category of Intellectual Property service. Thus, the appellants are not liable to pay service tax - appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 60163 Of 2016 - A/61191/2019 - Dated:- 17-12-2019 - HON BLE Mr. ASHOK JINDAL, MEMBER (JUDICIAL) AND HON BLE Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri B. L. Narsimahan and Ms. Krati Somani, Advocates for the Appellant Shri A. K. Saini, Authorised Representative for the Respondent ORDER Per : Ashok Jindal The appellant is in appeal against the impugned demands. 2. The facts of the case are that the appellant is engaged in manufacture, marketing and sale of various brands of Indian Made Foreign Liquor (IMFL)/alcoholic beverages in India. The appellant has entered into agreements with various independent bottlers who possesses the necessary licenses for manufacturing of alcoholic liquors. The bottlers retain certain fixed amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the brand owner being in the nature of business profit and not chargeable to service tax. Therefore, the appellant is not liable to pay service tax. He relied on the decision of this Tribunal in the case of BDA Pvt. Ltd. vs. CCE 2015 (40) STR 352 (Tri.-Del.) which has been affirmed by the Hon ble Apex Court reported in 2016 (42) STR J143 (S.C.). He also relied on the following decisions:- (i) M/s Diageo India Pvt. Ltd. vs. CCE, Thane-II (2013-TIOL-790-CESTAT-Mum) (ii) M/s Skol Breweries Ltd. vs. CCE ST, 2014-TIOL-588, CESTAT-Mum (iii) M/s Radico Khaitan Ltd. vs. CST 2016 (44) STR 133 (Tri.-Del.) (iv) Jagjit Industries Ltd. vs. CCE, 2017-TIOL-1660-CESTAT-CHD (v) Bacardi India Pvt. Ltd. vs. CST, Delhi, 2018-TIOL-2594-CESTAT-DEL 4. He further submits that in their own case, for the earlier period vide Final Order No. 60795/2019 dated 02.04.2019 and hold that the demand under the category of Franchise Service is not legally sustainable. Therefore, the impugned order is to be set-aside. Consequently, the interest and penalty are not sustainable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been provided on the value which represents the value of inputs i.e. raw materials and packaging materials used in the manufacture of such alcoholic beverages. 3. The CIABC has now sought clarifications on the tax base on which the service tax would be chargeable after allowing the deduction provided in the notification. In short, they want to know as to how many of the above 7 elements (para 2 above) would be includible in the value for the purpose of charging service tax. 4. For removal of doubts and with a view to avoid disputes on valuation, it is clarified that:- a) Service tax would be payable on the bottling/job charges, distribution costs and other reimbursables. b) So far as inputs i.e. raw materials and packing materials are concerned, one of the conditions of exemption notification No.39/2009-ST is that there should be documentary proof specifically indicating the value of these inputs. Therefore, service tax on the value of raw materials and packaging materials would be exempt only when such charges are specifically mentioned in the invoice raised/documents maintained by the CBU. c) As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use the intellectual property of the appellant and there is no transfer of any IPR to the CBU from the appellant. The CBU has no claim whatsoever on the rights of the appellant. The nature of transaction between the appellant and CBU indicates that the appellant to use the brand on his own account and there is no representational right given to the bottling unit for the brand name. The commercial interest of the bottling unit is to earn the consideration for bottling or manufacturing the alcoholic beverages. The appellant uses the bottling units for producing the said beverages in their brand names for sale in profit. The said activity has been dealt with by the CBEC in their Cir No. 332/17/09 TRU dated 30.10.2009. 10. After going through the Board s Circular dt. 30.10.2009 deals with the situation in this matter and the activity exactly undertaken by the appellant. In the light of the said Circular, it was held that the brand owner/appellants are not required to pay service tax as the surplus/profit earned by the CBU being in nature of profit. Therefore, as clarified by the CBEC through two circulars, the appellants are not liable to pay service tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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