TMI Blog2009 (1) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... consulting engineer’s service – appeal of assessee allowed - S/93/2006/MAS - 16/2009 - Dated:- 2-1-2009 - Shri P. Karthikeyan, Member (T) Smt. Radhika Chandrashekar, Advocate, for the Appellant. Shri N.J. Kumaresh, SDR, for the Respondent. [Order]. - This appeal filed by M/s. B.E.GELB Consultancy Services (BEGELB), Michigan, challenges an order passed by the Commissioner (A), Coimbatore. Under an agreement entered into by the appellants with M/s. L.G. Balakrishnan Brothers Ltd. (LGB), BEGELB transferred technical know-how and provided technical assistance to LGB for manufacture of automotive chains and associated equipment such as tools. LGB paid royalty @ 5% / 8% of sale price of chains for local sale/export as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion tax. The services were consumed in India. He also rejected the plea of limitation of the demand raised by the appellant on the basis that the copy of the relevant agreement had been furnished to the authorities on 24-11-03. 2. The Ld. Counsel appearing for LGB, authorized to represent the appellants, submits that the service provider in the instant case was, to the best of their knowledge, a proprietary concern. Shri Bruce E. Gelb had expired and therefore the liabilities abated. She submits that she could not obtain any document authenticated by the Indian Embassy, in the USA, certifying the status of the appellant as a proprietorship concern or a firm, as directed by this Tribunal. She submits a copy of the website of BEGELB whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing terms. 1. M/s. B.E.GELB Consulting Services will provide Technology transfer services to L.G. Balakrishnan Bros. Ltd. from 1st April, 1997 to 31st March, 2007. 2. BEGELB will provide Technical know-how and complete product design and engineering specifications and relevant advice including designs and details for manufacturing tools, machines, quality control machines for manufacture of inverted tooth silent chains. 3. It will provide detailed design for plain and guide link stamping dies and tools. 4. It will provide concept and design layouts for the production of automotive silent chain. 5. It will provide technical consultation on upgradation of technology. 6. It will provide technical and commercial advise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined vide clause 55A of Section 65 of the Act as any right to intangible property such as trade marks, designs, patterns. I find that if the transferor of intellectual property deploys its staff to train its client's personnel in applying the know-how, that is incidental to the main object of the agreement namely, transfer of technical know-how; the service rendered remains IP Service. As per a Circular issued by the CBEC, Engineering Consultancy envisages Services in the nature of technical advice rendered by a professionally qualified engineer or, a firm of such engineers, in the feasibility, basic design, detailed design, construction, commissioning and running of a project which also includes training of manpower, trouble shooting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d technical know-how in exchange for a lumpsum payment or payment of royalty. In the instant case, the technical fee paid over a period of time does not cease to be compensation received in exchange for technical know-how. The payment is not exigible under engineering consultancy. 4. I find that the impugned order found that BEGELB rendered technical know how, an intangible property, for which it had received royalty. The proceedings did not seek to recover service tax on royalty paid by LGB @ 5% / 8% of the sale price of the product manufactured with the know how in terms of the agreement. In addition to royalty, LGB paid technical know how fees quarterly since July, 1997. This was found to be consideration for engineering consultancy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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