BETTS UK LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THIS is stay application filed by the appellants for dispensing the pre -deposit of the duty demanded by the lower authority. While hearing the said application we find that the matter is squarely covered by the decision of the Tribunal and therefore we decided to dispose off the appeal itself by waiving the pre -deposit with consent of both sides.

(2.) THE learned advocate for the appellant submits that the appellant a foreign company is providing technical know how and technical assistance, transfer of technology and services related to the manufacture of certain products by M/s. Betts India Pvt. Ltd. for which they were receiving technical assistance from the appellant for which the royalty is agreed at the rate of 4% of the total net sale price of the products manufactured and sold by the Indian company. This royalty amount received by them was held liable to service tax at the rate of 5% and accordingly was demanded and confirmed against them.

(3.) THE learned Advocate for the appellant pleaded that the transfer of technology was not the service liable to taxes and in this regard they referred the decision of the Tribunal in the case of C.C. Chennai v. Veleo Friction Material India Pvt. Ltd. in which it was held that the transfer of technology by foreign company to Indian company on payment of royalty in consideration of such transfer was not service covered under Section 65 of the Finance Act, 1994 and therefore the demand of service tax is not sustainable. Similar decision was given in the case of Turbo Energy Ltd. v. Commissioner of Central Excise wherein it was held that the royalty paid to foreign supplier for transfer of technology not payment for service but only a share of product or profit reserved by owner for permitting another the use of his property.