BDA PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE
LAWS(CE)-2015-6-13
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on June 12,2015

Bda Pvt. Ltd. Appellant
VERSUS
COMMISSIONER OF CENTRAL EXCISE Respondents




JUDGEMENT

ASHOK JINDAL,J - (1.)THE appellant is in appeal against the impugned order confirming the demand of Service Tax under the category of Intellectual Property service along with interest and penalties under section 77 and 78 of the finance Act, 1994.
(2.)The brief facts of the case are that the appellant is owner of brand name Officers Choice. They are engaged in manufacture and sale of Indian Made Foreign Liquor (IMFL). As the appellant was not having manufacturing facility to produce IMFL in the State of Uttar Pradesh, they entered into agreement dated 19.8.2000 with M/s. Pilkhani Distillery and Chemical Works (hereinafter referred to as M/s. Pilkhani). The Revenue is of the view that M/s. Pilkhani is using the brand name and technical knowhow of the appellant and paying consideration in terms of royalty for use of brand name and technical knowhow of the brand owner i.e. the appellant, but the appellant is not paying service tax thereon on the belief that the permission to use the brand name by the appellant is not a taxable service under the category of Intellectual Property Service under Section 65(65A) of the Finance Act, 1994. Therefore, the show cause notice dated 12.2.2008 was issued by invoking extended period of limitation for the period 10.9.04 to 31.3.06 to demand Service Tax under the category of Intellectual Property service. The said show cause notice was adjudicated. The demand of service tax was confirmed against the appellant along with interest and penalties under section 77 and 78 of the Finance Act, were imposed. Aggrieved from the said order, the appellant is before us.
(3.)SHRI L.P. Asthana, learned advocate along with Shri Vishal Agarwal, Advocate appeared before us and submits that appellant was the brand owner of IMFL and marketing also. They got manufactured IMFL through M/s. Pilkhani and the same was delivered/sold by them and earned profit as per difference in market rate/price and cost price as per the agreement with M/s. Pilkhani. Therefore, they are not liable to pay service tax as M/s. Pilkhani is their job worker. It is further submitted that the issue of taxability of the service was clarified by the CBEC Circular No. 249/I/2006 -CX.4 dated 27.10.2008 wherein it has been clarified that the agreement and activity undertaken by the appellant and M/s. Pilkhani, no service tax is payable by the appellant. Therefore, they are not liable to pay the service tax. He further, submits that the issue was again examined by the CBEC and it further clarified by Ministry of Finance letter vide F. No. 332/17/2009 -TRU dated 30.10.2009 clarifying that the profit earned by the brand owner being in the nature of business profit, no service tax is payable. Therefore, appellants are not liable to pay the service tax. He also relied on the decision of this Tribunal in the case of Diageo India Pvt. Ltd. v. CCE, Thane II [2013 -TIOL -790 -CESTAT -MUM] and Skoll Breweries Ltd. Sab Miller India Ltd. v. CCE & ST, Aurangabad [].
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