ORDER
P.G. Chacko, Member (J)
1. After examining the records and hearing both sides, we note that the revisional authority has demanded service tax of Rs. 1,53,481/- from the assessee in respect of royalty payments made to a foreign company as consideration for trademarks, drawings, wooden models and aluminum moulds for the ‘contract products’ to be manufactured in India by the assessee. The said transactions took place during 16.08.2002 to 17.10.2003 in terms of an agreement executed between the appellants and the foreign company. The lower authority has held the above transfer of trademark, drawings etc., to be “Consulting Engineer’s Service” and accordingly the above duty was demanded.
2. Learned Counsel for the appellants has claimed prima facie case against the above demand by citing the following decisions:
(i) Turbo Energy Ltd. v. Commissioner of Central Excise, Chennai-III .
(ii) Navinon Ltd. v. Commissioner of Central Excise, Mumbai .
(iii) Colgate Palmolive Co. v. Commissioner of Central Excise & Customs, Goa 2006-TIOL-949-CESTAT-Mum.
(iv) Betts UK Ltd. v. Commissioner of Central Excise, Goa 2006-TIOL-948-CESTAT-Mum.
(v) Commissioner of Central Excise, Chennai-III v. Veleo Friction Material India Pvt. Ltd. .
(vi) Commissioner of Central Excise, & Service Tax, Bangalore v. Toyoda Iron Works Co. Ltd. 2007 (7) S.T.R 603 (Tri.-Bang.).
(vii) The Commissioner of Central Excise, Calicut/Cochin v. 1. RUBCO Sales International Pvt. Ltd. and 2. Sun Metal & Alloys (P) Ltd.
(viii) Aviat Chemicals Pvt. Ltd. v. Commissioner of Central Excise (Service Tax), Mumbai .
(ix) Suraj Bhan Synthetics (P) Ltd. v. Commissioner of Central Excise, Hyderabad-II .
(x) BST LTd. v. Commissioner of Central Excise, Cochin 2006-TIOL-1305-CESTAT-BANG).
On the other hand, learned SDR submits that the agreement between the assessee and the supplier of trademarks, drawings etc., had provided for technical assistance also and, therefore, the transaction should be held to be “Consulting Engineer’s Service” defined under the Finance Act, 1994. It is pointed out that ‘technical assistance’ is one factor mentioned in that definition. Learned SDR has also referred to the Tribunal’s decision in Nokia (I) Pvt. Ltd. v. Commissioner of Customs, Delhi 2006 (1) S.T.R. 233 (Tri.-Del.) and Notification No. 18/2002-S.T. dated 16.12.2002.
3. After considering the submissions, we have prima facie not found valid reasons for the Revenue to justify the impugned demand of service tax. The definition of “Consulting Engineer’s Service” is very clear. It has been consistently held by this Tribunal (vide case law cited by learned Counsel) that transfer of technical know-how is not within the ambit of Consulting Engineer’s Service. Transfer of trademarks, drawings etc., would, prima facie, come within the scope of the taxable service of Intellectual Property Service, which was introduced after the period of dispute. The revisional authority has not established that the said transaction is squarely covered by the definition of “Consulting Engineer’s Service”. The agreement, of course, contains mention of ‘technical assistance’. It says that the foreign company may send its representatives to the Chennai facility of the assessee for providing technical assistance. Whether such technical assistance was actually given is a moot question of fact, which apparently remains untouched in the impugned order. The Notification cited by learned SDR relates to exemption in respect of “Consulting Engineer’s Service”. This Notification pre-supposes that a Consulting Engineer provides a taxable service, to a client, of transfer of technology. If such transfer of technology is accompanied by provision of technical assistance, technical consultancy etc., as required by the definition of “Consulting Engineer’s Service”, the Notification may get attracted with effect from 16.12.2002. However, in the present case, it is yet to be made out by the Revenue that the subject transaction was accompanied by provision of technical assistance etc., to the assessee.
4. We have also not found anything in the Tribunal’s decision in Nokia case, which can be said to be in favour of the Revenue in the present case. The facts of Nokia case are altogether different.
5. Having found prima facie case for the appellants, we order grant of waiver of predeposit and stay of recovery in respect of the tax and penalty amounts.
(Dictated and pronounced in open court)