C.L. Mahar ORDER
Dilip Gupta, J. (President)
1. This appeal has been filed by M/s. Modi Mundipharma Beauty Products Pvt. Ltd.1, formerly known as Modi Revlon Pvt. Ltd., to assail the order dated 23 December, 2016 passed by the Commissioner, Service Tax, Delhi-II2 on the two show cause notices issued to the Appellant. In regard to the first show cause notice dated 26 December, 2012, the Commissioner has confirmed the demand of service tax amounting to Rs. 5,06,62,452/- for the period 2007-08 to March, 2012 under section 65(105)(zzr) of the Finance Act, 19943. The remaining demand under "goods transport agency" service has been dropped. In regard to the second show cause notice dated 17 April 2014, the Commissioner has confirmed the demand amounting to Rs. 26,91,973/- under section 65(105)(zzr) of the Finance Act for the period April, 2012 to June, 2012 but the demand under 'goods transport agency' service has been dropped.
2. The Appellant is engaged in manufacture of cosmetics and skin care products. It has its corporate office at New Delhi but its factory is situated at Ghaziabad. Two agreements, both dated 27 July, 1994, were entered into by the Appellant with Revlon Mauritius Limited4 at Mauritius and Freya Holdings Limited5 at British Virgin Island. Under the former agreement6, Revlon Mauritius granted to the Appellant the exclusive right to use the "know how" in any plant approved by Revlon Mauritius in accordance with the processes, specifications and recipes thereof in connection with the manufacture, marketing, sale and distribution of Revlon products in the territory. 'Know how' has been defined to mean formulae, processes, recipes, product specifications, technical and manufacturing data, information, equipment specification of raw materials, and other technical information and data necessary to manufacture Revlon products. In consideration of the grant of license rights to the Appellant, the Appellant was required to pay to Revlon Mauritius, a royalty of 5 per cent of its net sales per annum. This Agreement, executed on 27 July, 1994 was initially up to August, 2002 but was extended from time to time and the last extension was to expire in March, 2012.
3. The latter agreement dated 27 July, 19947 was executed between the Appellant and Freya Holdings under which Freya Holdings granted to the Appellant an exclusive license to use the Licensed Marks as trademarks and all other intangible rights and the exclusive right to import, make, have made and sell Revlon Products subject to the terms and conditions of the agreement. Freya Holdings granted a further right to the Appellant to use the name 'Revlon' in its corporate name. The agreement further provided that Freya Holdings shall not grant any rights to manufacture or sell cosmetics, toiletry, beauty treatment, fragrance or skin care product to any third party without first offering such a product to the Appellant.
4. A show cause notice dated 26 December, 2012 was, however, issued to the Appellant for the period 2007-08 to March 2012 mentioning therein that a letter dated 30 August, 2012 had been received from the office of the Deputy Commissioner at Ghaziabad to inform the Department that the Appellant was receiving 'inward freight' and 'intellectual property right' service from a provider situated outside India but was not paying service tax on the gross value paid for receiving the said services. The Appellant was, therefore, asked to provide details of taxable/non-taxable receipts. On scrutiny of the documents provided by the Appellant, it tr........