2013 (3) TMI 364 - AT - Central Excise

Cenvat Credit - Input Service - Rule 2(l) - Services of commission agents - nexus with the manufacture of final products - Held that - As per Rule 2(1)the appellant are eligible for cenvat credit on the services of the commission agent and there is nothing in the definition of input service or in any other provision of Cenvat Credit Rules that the input services, for availing cenvat credit, have to be availed before the removal of the goods. The input service under Rule 2(l) of the Cenvat Credit Rules, 2004, the services of commission agent, which are meant for promoting the sale of the goods are specifically covered by the expression advertisement or sale promotion services in the definition of input service and activities related to business would also cover the services of procuring sale orders through commission agent. - Stay granted.

Summary

Issues:
- Availment of cenvat credit on services of commission agents in connection with the sale of final products.
- Eligibility for cenvat credit on services of commission agents.
- Requirement of pre-deposit of cenvat credit demand, interest, and penalty.

The case involved the appellant, a manufacturer of Cement, who availed cenvat credit of service tax paid on various input services, including commission agents' services for the sale of final products. The Department issued a show cause notice for recovery of cenvat credit, alleging the services of commission agents did not have a nexus with the manufacture of final products, thus making the appellant ineligible for cenvat credit. The Asstt. Commissioner confirmed the cenvat credit demand, interest, and imposed a penalty. On appeal to the Commissioner (Appeals), the decision was upheld, leading to the current appeal.

During the hearing for the stay application, the appellant did not appear, resulting in an ex parte decision on the stay application. The Department opposed the stay application, arguing that the services of commission agents had no nexus with the manufacture of final products and were not cenvatable, especially since these services were used after the goods' removal. The Department contended that the appellant failed to establish a prima facie case warranting a waiver from the pre-deposit requirement.

The Tribunal carefully analyzed the definition of 'input service' under the Cenvat Credit Rules, which covered services related to marketing, sale promotion, and activities related to business. The Tribunal noted that the services of commission agents for promoting the sale of goods fell under the category of 'advertisement or sale promotion services,' making them eligible for cenvat credit. Additionally, the Tribunal highlighted that the requirement for availing cenvat credit did not necessitate the services to be used before the goods' removal. Various services listed as 'input services' were not directly linked to the goods' removal, supporting the appellant's eligibility for cenvat credit on commission agents' services. Consequently, the Tribunal waived the pre-deposit requirement for the cenvat credit demand, interest, and penalty, allowing the stay application and staying the recovery until the appeal's disposal.