KEHEMS CONSULTANTS PVT. LTD. Vs. C.C.E. INDORE
LAWS(CE)-2015-2-22
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on February 27,2015

Appellant
VERSUS
Respondents

JUDGEMENT

R.K. Singh, Member (T) - (1.)APPEAL is filed against Order -In -Appeal No. IND -I/63/09 dated 18.03.2009 which upheld the Order -In -Original dated 22.10.2008 in terms of which the duty demand of Rs. 49,815/ - under 'Franchise Service' was confirmed alongwith interest and penalties.
(2.)DURING the relevant period (1.7.03 to 31.3.05) the definition of franchise was as under:
"Section 65(47) 'franchise' means an agreement by which - -

(i) the franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved;

(ii) the franchisor provides concepts of business operation to franchisee, including know how, method of operation, managerial expertise, marketing techniques or training and standards of quality control except passing on the ownership of all know how to franchisee;

(iii) the franchise is required to pay to the franchisor, directly or indirectly a fee; and

(iv) the franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person."

The appellants contended that there was no written agreement with 'M/s. Kehems Engineering who were only given right to use and sell the plants, processes and equipment using the technology of the appellants in consideration of which the appellants were receiving 0.5% of the goods income collected by Kehems Engineering' which they happen to call royalty. They stated that Kehems Engineering was 'merely using their know -how and the transaction was not that of franchise service as Kehems Engineering while using and selling the products was not representing itself as the appellants.'

No one appeared for the appellants during the hearing. However we have perused the relevant records and heard the Ld. AR. It is evident that during the relevant period, to satisfy the definition of 'franchise' all the four limbs of the definition of franchise (quoted above) had to be satisfied. In the present case, neither in the show cause notice nor in the Primary Order or the impugned order, it has been brought out as to whether there was any grant of representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol as the case may be. Thus this limb of the definition is clearly not satisfied. There is also nothing on record to show that the last limb of the definition is satisfied in the present case. In the case of Dewsoft Overseas Pvt. Ltd. Vs. CCE, New Delhi : 2008 (12) S.T.R. 730 (Tri) it was held that though the franchisor provided know -how, expertise and quality control and granted representational right, no enquiry was made by the revenue for ascertaining whether as per the agreement appellants were under obligation not to engage in providing similar service with other persons and therefore the demand under franchise service was not sustainable.

(3.)IN view of the analysis above, we do not find the impugned order to be sustainable and therefore allow the appeal.
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