THERMAX LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appeal is directed against Order -in -Original No. PI/Commr/ST/19/2012, dated 25 -4 -2012 passed by Commissioner of Central Excise, Pune. The appellant, M/s. Thermax Ltd. entered into an agreement, i.e., out -of -court settlement with M/s. Purolite International Ltd. (Purolite in short) USA. Vide agreement dated 23 -2 -2010 it was resolved to settle amicably all disputes between the parties worldwide including, but not limited to, pending litigation in the United States District Court for the Eastern District of Pennsylvania and pending litigation between Brotech Corporation and Purolite International Ltd. against Thermax Europe Ltd., Thermax Ltd. and Narvinder Sachdev in the High Court of Justice Chancery Division, Royal Courts of Justice, UK. As per this agreement M/s. Purolite agreed to irrevocably transfer to Thermax all claims, rights and interests necessary to use Purolite Technology and Information and Thermax shall jointly co -own with Purolite the Purolite Technology and Information in perpetuity and not subject to any geographical restrictions or customer restrictions. Upon the technology transfer, Thermax became co -owner in the Purolite Technology and Information and was entitled to use, assign, sell, license, transfer or convey their respective interests in the Purolite technology and information. For these rights, Thermax agreed to pay Purolite a sum of US$ 3.8 Crore. The Department was of the view that the transfer of technology from Purolite USA to Thermax Ltd. India amounts to receipt of service by Thermax and the service so received merited classification under "intellectual property rights service" as defined in Sections 65(55a) and 65(55b) read with Section 65(105)(zzr) of the Finance Act, 1994. Accordingly, a show cause notice dated 28 -9 -2011 was issued to the appellant proposing to classify the service received under "intellectual property right service" and demanding Service Tax amounting to Rs. 18,05,50,717/ - under the provisions of Section 73 of the Finance Act read with Section 66A and Rule 2(1)(d)(iv) and Rule 6 of the Service Tax Rules, 1994. The notice also proposed to demand interest and imposed penalties. The notice was contested by the appellant and was adjudicated vide the impugned order and the demands were confirmed along with interest thereon apart from imposition of penalties under Sections 76 & 77 of the Finance Act, 1994 and an equivalent amount of penalty under Section 78 ibid. Aggrieved of the said order, the appellant is before us.

(2.) THE ld. Counsel for the appellant makes the following submissions.

(3.) WE have carefully considered the submissions made by both the sides. Our findings and conclusions are discussed hereinafter.