CCE Vs. AKZO NOBLE NONSTICK COATINGS

JUDGEMENT

(1.) THIS appeal has been filed by the Revenue against the order in Appeal No. 9/2007(Ahd -III)CE/DK/Commr (A) dated March 7, 2007. Brief facts of the case are that M/s. Akzo Nobel Nonstick Coatings Ltd. (hereinafter referred to as "the Respondent'') were engaged in the manufacture of aqueous and non -aqueous paints falling under Chapter 32 of the Central Excise Tariff Act, 1985. The appellant had entered into a licence agreement dated April 1, 2002 with M/s. Akzo Noble Coating International B.V. of Netherlands. On examination of the financial accounts for the period from November 1999 to October 2004, it was observed that the respondent had paid certain amounts in form of royalty for its disposal of valuable information and know -how relating to receipt, prescriptions, formula, technical data, skill in process of manufacturing and marketing support in the area of nonstick coating and related product. M/s. Akzo Noble Coating International B.V. of Netherlands had agreed to grant exclusive rights to utilize trade secrets to the respondent. The respondent had made payment of Rs. 50,76,210 in the financial year 2002 -03 and Rs. 36,62,356 in the year 2003 -04 to the Netherlands company. The respondent had not paid the service tax on the amount of royalty charges. Therefore, the Department issued a show -cause notice for non -levy of service tax, amounting to Rs. 2,53,811 in the year 2002 -03 and Rs. 2,92,988 for the year 2003 -04. The said show -cause notice was adjudicated by the original authority vide Order No. 40/2006 dated October 5, 2006 in which the service tax was confirmed under the category of consulting engineering service. The original authority has also ordered recovery of interest and penalties under sections 75A, 76, 77 and 78 were imposed on the respondent. The respondent preferred an appeal before the Commissioner, Central Excise (Appeals), who vide impugned order has set aside the order in original and allowed the appeal of the respondent. The Revenue has challenged the impugned order in the present appeal.

(2.) NONE appeared on behalf of the respondent.