2014 (1) TMI 1048

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....lit / Package type Air Conditioner & parts thereof falling under Chapter Heading 84.15 of the Schedule to the Central Excise Tariff Act, 1985. The appellants were served a show cause notice dtd. 20.2.06 calling upon them to show cause as to why the service received by them from the Hitachi Japan should not be considered as taxable service under the category 'consulting engineer' or 'Scientific & Technical Consultancy service' or 'Franchise service' and service tax of Rs.4,47,282/- for the month of Sept 04 should not be demanded and interest and penalty should also not be imposed. The demand was in respect of technical collaboration agreement and royalty paid to Hitachi Japan. The said SCN was adjudicated vide impugned order wherein the adju....

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....y gone through the facts of the case and submission made by the appellants in their appeal memorandum as well as during the personal hearing. The issue to be decided in the present case is whether the payment of Rs.43,85,119/- towards Technical Knowhow and inspection charged and Royalty by the appellants to M/s. Hitachi Japan for the period September' 04 for the service received by them falls in the category of Consulting Engineering Service. I find that the appellants had paid Rs.43,85,119/- to the Licensor against the head of royalty and Technical knowhow provided under 'License Agreement' Dated 10/04/1998 on which no Service Tax has been paid. The appellants have paid this amount to Licensor for its disposal of valuable information and k....

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....echnical knowhow fee and royalty paid to holding company towards right to use trademark merely a transaction in property and not a consultancy advice was taken by Hon'ble Tribunal in case of M/s. Samsung Electronics v/s CCE-2006(1) STR 217(T). The Hon'ble Tribunal in following cases also held that royalty or technical knowhow is not liable to be taxed as consulting engineers service as it is not a payment for service rendered: a) Sevana Electrical Appliances P. Ltd. v/s. CCE Cochin- 2006(1) STR 323(T-Bag.) b) CCE, Indore v/s. J.K. Industries Ltd. -2006(2) STR 116(Tri. Bang.) c) Araco Corporation V/s CCE, Bangalore - 2005(180) ELT 91(Tri. Bang.) Therefore, the technical knowhow provided by the Licensor cannot be equated with any ....