R.M. DHARIWAL Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal is directed against Order -in -Appeal No. P -III/VM/169 -170/2009, dated 21 -8 -2009. The relevant facts that arise for consideration are that the appellant herein was charged as to not discharging the service tax liability for an amount received by them as royalty from M/s. Dhariwal Industries Ltd. for the use of trade name/brand name on the products which were manufactured and cleared consequent to an agreement dated 20 -4 -2004. Revenue authorities were of the view that as per the terms and conditions of the above -mentioned agreement, M/s. Dhariwal Industries Ltd. is required to pay royalty to the appellant at a fixed rate of 3% of Net sales on the basis of audited annual reports. On scrutiny of the audited balance sheet for the year ending 31 -3 -2005, it was noticed that the appellant had issued two invoices for the receipt of the royalty for the period 1 -4 -2004 to 10 -9 -2004 and did not discharge the service tax liability. Show cause notice was issued which was adjudicated and demand of the service tax liability was confirmed along with interest and penalties were imposed. Aggrieved by such an order, appellant preferred an appeal before the first appellate authority. The first appellate authority after following due process of law did not agree with the contention raised by the appellant and rejected the appeal.

(2.) LD . AR on the other hand, would draw our attention to the Notification No. and submit that the said notification specifically states service tax liability would not arise on the appellant to that portion of the value of taxable service which is received by the service provider from the customer prior to 10th day of September, 2004. He would then submit that the balance sheet for the year 2004 -2005 was finalized on 8 -9 -2005 and appellant could be ineligible for the exemption granted by Notification No. He would reiterate the findings of the lower authorities.

(3.) WE have considered the submissions made by both sides and perused the records.