MOTHERSON AUTOMOTIVE Vs. CCE

JUDGEMENT

(1.) THIS appeal filed by M/s Motherson Automotive Technologies and Engineering (MATE) is directed against an order of the Commissioner (Appeals) which sustained the demand of service tax from them under the category of Consulting Engineer. Original authority had demanded service tax of Rs. 3,11,367/ - for the period from February, 2000 to March, 2001, appropriate interest due thereon and imposed penalties of varying amounts under Sections 75A, 76, 77 and 78 of the Finance Act '94 (the Act). In the impugned order the Commissioner vacated the penalties while affirming the demand of tax and interest. The facts of the case are that the appellants had received technical know how for manufacture of automobile components from M/s. Tennex Europe Limited, (Tennex), England, against payment of an amount of 1,34,000 UK Pounds under an agreement which also had provided for payment of royalty @ 5% of the sale price of finished products. The project did not take off. The demand of service tax under engineering consultancy is on the amount of 1,34,000 UK Pounds paid as lumpsum to Tennex.

(2.) THE learned consultant submitted that it is settled by several judicial authorities that transfer of technical know -how does not amount lo rendering of Engineering Consultancy. The agreement between Tennex and the appellants did not authorize MATE to discharge service tax on behalf of Tennex. Tennex did not have an office in India during the material period. The appellant was neither an authorized person of Tennex or operated an office of Tennex. Therefore, the services received from Tennex were not chargeable to service tax. He submitted a copy of the decision of the Tribunal in Navinon Ltd. v. CCE, Mumbai . The learned JCDR left the matter to the Bench.

(3.) WE have carefully gone through the case records and the submissions by both sides. As rightly argued by the Ld. Consultant, transfer of technical know -how for manufacture of any product in exchange for a lumpsum payment or payment of royalty does not constitute rendering of Consulting Engineer Service. We also find that before 16.08.2002, an Indian recipient of service was not required to discharge tax liability on any service received from abroad. In the case of Navinon Ltd. v. CCE, Mumbai (supra), this Tribunal had held that the appellants in that case did not receive engineering consultancy when it received technical know how compensated by payment of royalty. Following the above ratio we vacate the impugned order and allow the appeal filed by M/s. Motherson Automotive Technologies and Engineering.