2015 (4) TMI 1033 - AT - Central Excise

Denial of refund claim - Service tax amount paid on the commission to the agents - refund of unutilised credit of duty paid on input and input services - adjudicating authority rejected the refund claim on the ground that the services were not used in the manufacture of the final products which were exported - Held that - issue is no more res integra. Honourable High Court of Gujarat in the case of Commissioner of Central Excise, Ahmedabad - II v. CEDILE Healthcare Ltd - 2013 (1) TMI 304 - GUJARAT HIGH COURT has settled the issue - though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agents not being analogous to the activities mentioned in the definition, would not fall within the ambit of the expression activities relating to business. Consequently, CENVAT credit would not be admissible in respect of the commission paid to foreign agents - impugned order is not sustainable and is liable to be set aside - Decided in favour of Revenue.

Summary

Issues:
Appeal against order setting aside refund of service tax on commission to agents utilized for export of goods.

Analysis:
1. Refund Claim Rejection: The appeal was filed against an order setting aside the refund claim of service tax paid on services rendered by a commission agent for the sale of goods abroad. The adjudicating authority rejected the refund claim as the services were not considered to be used in the manufacture of the final exported products.

2. Appellate Authority Decision: The first appellate authority accepted the arguments of the appellant assessee, setting aside the original order and allowing the appeal. This decision led to the revenue filing an appeal against the order.

3. Judicial Precedent: The Tribunal referred to a judgment by the Honourable High Court of Gujarat, which clarified the definition of input service in the context of sales promotion activities and services provided by commission agents. The court emphasized that services used directly or indirectly in the manufacture of final products are eligible for refund, which did not include commission paid to agents.

4. Decision and Rationale: After considering submissions from both sides and the judicial precedent, the Tribunal concluded that the services provided by the commission agent did not fall within the purview of input services as per the Cenvat Credit Rules. The Tribunal held that the commission agent's services were directly related to sales rather than sales promotion, making the refund claim ineligible. Therefore, the impugned order was set aside, and the appeal was allowed based on the authoritative judicial pronouncement and the settled legal position on the issue.