DABUR INDIA LTD. Vs. COMMISSIONER OF C. EX. & S.T., GHAZIABAD
LAWS(CE)-2015-2-105
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on February 27,2015

DABUR INDIA LTD. Appellant
VERSUS
Commissioner Of C. Ex. And S.T., Ghaziabad Respondents




JUDGEMENT

R.K.SINGH - (1.)APPEAL has been filed against Order -in -Original No. 07/Comm/ST/2009, dated 15 -5 -2009 in terms of which service tax demand of Rs. 59,07,000/ - along with interest and penalties for the period 1 -4 -2001 to 31 -3 -2005 has been confirmed under the category of "Management Consultant" service under Section 65(65)/65(105)(r) of the Finance Act, 1994.
(2.)The facts of the case are as under:
During the audit of the appellants it was noticed that they received an amount of Rs. 801.89 lakhs during the period 1 -4 -2001 to 31 -3 -2005 on account of royalty for the use of their trade mark from three foreign based companies namely M/s. Redrock Ltd., UK, M/s. DNPL, Nepal and M/s. ACCL, Bangladesh. The impugned demand was confirmed on the ground that such use of trade mark fell under the category of 'Management Consultant Service' liable to service tax during the relevant period. The adjudicating authority also held that the said service rendered did not amount to export of service because the amount of royalty received as shown in the balance sheet was shown in Indian currency and that the claim of the appellants that they did not receive any amount from M/s. Dabur Nepal (Pvt.) Ltd. (DNPL) is not correct because in their letter dated 28 -8 -2006 they confirmed the receipt as royalty from M/s. Redrock Ltd., U.K., M/s. DNPL, Nepal and M/s. ACCL, Bangladesh.
The appellants have contended that: -
(i) They were not providing any management consultant service as they were only getting payments on account of royalty for allowing the use of their trade mark to the said three foreign companies as is evident from the agreements entered into by the appellants with each of them.

(ii) Such services are specifically covered under Intellectual Property Service and not under Management Consultant service. They cited several judgments including the judgment of CESTAT in the case of Castrol Ltd. v. CCE, Raigad [ : 2007 (8) S.T.R. 254 (Tri. - Mum.)], to assert that the agreement providing for royalty payment on sale of product would not be covered under Management Consultant service.

(iii) There can be no service tax liability on royalty amount not received by the appellant during the relevant period and they had not received any amount from M/s. ACCL, Bangladesh during the relevant period.

(iv) The royalty received from M/s. Redrock Ltd. by the appellants was in convertible foreign currency and so in terms of Notification No. , dated 9 -4 -1999 and No. 21/2003 -ST, there was no service tax payable by the appellants. The services were provided by the appellants to companies located abroad and such services qualify as "Export of Service" in terms of Circular No. , dated 25 -4 -2003 and Export of Service Rules, 2005.

(v) The services rendered outside India were not liable to service tax.

(vi) There has been no suppression or willful mis -statement of facts and therefore, the demand is also time -barred, and

(vii) The manner of calculation of tax liability was incorrect,

(3.)LD . Departmental Representative, on the other hand, contented that the services rendered by the appellants are covered under the scope of Management Consultant Service, as defined under the Finance Act, 1994 as is evident from the description of services rendered in terms of the agreements entered into by the appellants with the service recipients abroad.
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