Judgment:
1. After hearing both sides for some time on the application for waiver of pre-deposit of Service Tax of Rs. 30,64,976/- and penalty of Rs. 33,66,476/- (Rs. 3,00,000/- under Section 76, Rs. 1,000/- under Section 77 Rs. 500/- under Section 75A and Rs. 30,64,976/- under Section 78), we found that it was possible to decide the appeal itself at this stage, as the issues in disputes are settled by the earlier decisions of the Tribunal. Therefore, after waiving pre-deposit and granting stay of recovery, we proceed to take up the appeal itself for final decision.
2. The appellants herein are engaged in the manufacture of Multilayered Plastic Laminated Collapsible Tubes and they have entered into agreement with M/s. KMK Lizence Ltd. on 1-9-1997 under which M/s. KMK were to provide Technical Know-how for manufacture of Multilayered Plastic Laminated Collapsible Tube making machine of Model LTM/TET and the tools thereof. The Royalty of Rs. 5,93,58,842/- was remitted during the year 1988-99 towards Technical Know-how fees and a further amount of Rs. 19,40,670/- was paid in the year 2000-2001. The show cause notice dated 28-7-2003 was issued to the appellants on the ground that they had received services, which were taxable under the category of "Consulting Engineer". Since they were authorized agent of M/s. KMK as per Rule 6, they were liable to pay service tax and penalty. The notice was adjudicated by the Dy. Commissioner who confirmed the demand and also imposed penalties as above. His order was carried in appeal to the Commis-sioner (Appeals) who upheld the adjudication order. Hence this appeal.
3. We have heard both sides. We find that the authorities below have treated the appellant herein as the agent of M/s. KMK the contract specifically provided that royalty payable was net of taxes which according to the authorities meant, that taxes payable if any would be paid by the appellant before remitting the royalty. We notice that in the case of Navinon Ltd. v. Commissioner of Central Excise, Mumbai-VI , the Tribunal held that the appellants in India who were recipient of technical know-how from foreign company against payment of royalty, could not be fastened with liability to pay service tax as they were not authorised representative of the foreign company.
The decision in the case of Navinon Ltd. has been followed in Bajaj Auto Ltd. v. Commissioner of Central Excise & Customs, Aurangabad , we further note that in the case of Navinon Ltd. cited Supra the Tribunal has held that royalty payments in the present case for the use of technology and know-how cannot be equated with any services to be provided by the foreign company to the Indian company.
The present case involved the period prior 16-8-2002 and the decisions of the Tribunal in Navinon Ltd. and Bajaj Auto Ltd. would therefore be applicable. Following the ratio of above orders, we hold that the duty demand and penalties cannot be sustained. Accordingly, we set aside the impugned order and allow the appeal.