2008 (9) TMI 47

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....ct). The Commissioner (Appeals) also confirmed the demand of interest on the service tax demanded. 2. The facts of the case are that Day International manufacture textile machinery and parts. Day International entered into an agreement with M/s. Lakshmi Machine Works (LMW) for manufacture cots and aprons (components of ring frame machine) by LMW. Day International provided technical know-how, technical assistance and imparted training in marketing and manufacture of cots and aprons to LMW. LMW obtained manufacturing and selling right of the licensed products and right to use the trade name of Day International. As per the agreement, Day International received royalty at the rate of 3 per cent of the sale proceeds of the licensed products....

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....ious activities constituting Consulting Engineer Service by paying royalty at the rate of 3 per cent of the sale proceeds of the licensed product. In the absence of break-up among the activities found to be taxable and not taxable under Consulting Engineer Service, the Commissioner (Appeals) demanded tax on the entire amount paid by the appellants to the tune of Rs. 57,658. 4. In the appeal filed, Day International has relied on a plethora of case law all of which held that transfer of technical know-how did not constitute Consulting Engineer Service and that royalty paid in exchange was in the form of a share of profit and not a payment for any service received. In Navinon Ltd. (supra), the Tribunal had held the view that royalty paymen....