2014 (8) TMI 15 - AT - Central Excise

Cenvat Credit - Input services - commission agent services for promoting the sale of finished goods - Held that - The entire grounds of the appeal of the Revenue is basically trying to interpret the provisions of the Rule 2(l) of the Cenvat Credit Rules 2004, to drive home a point; that the sales promotion and such other activities are related sales commission service and do not qualify for as an Input Service. Revenue has placed reliance on the judgment of the Hon ble High Court of Gujarat in the case of Cadila Health Care Ltd - 2013 (1) TMI 304 - GUJARAT HIGH COURT of the judgement leadership , I find that the lordship have categorically held that the Cenvat Credit on the service tax paid on the sales commission is per-se is not allowed but if the said commission is paid for promotion, that would be a different. The factual matrix is recorded by the first appellate authority indicates that the amount paid by the appellant is a commission for sales promotion expenses. - Credit allowed - Decided in favor of assessee.

Summary

Issues:
- Appeal against allowing Cenvat Credit on service tax paid on Business Auxiliary Services for sales commission.

Analysis:
1. The Revenue filed an appeal against the order allowing Cenvat Credit on service tax paid on Business Auxiliary Services for sales commission. The first appellate authority permitted the credit based on the definition of "input service" in the Cenvat Credit Rules 2004, including "sales promotion." The authority considered the commission paid to be for promoting the sale of finished goods, supported by a Chartered Accountant certificate.

2. The first appellate authority's decision was based on factual findings and the absence of contrary evidence from the Revenue. The Revenue's appeal focused on interpreting the Cenvat Credit Rules to argue that sales promotion activities do not qualify as an input service. They cited a High Court judgment but failed to provide evidence contradicting the commission's purpose for sales promotion.

3. The judge referred to the High Court judgment cited by the Revenue, which distinguished between sales commission and commission for promotion. The judge found that the commission paid in this case was for sales promotion expenses, aligning with the Chartered Accountant's certificate and the first appellate authority's findings.

4. Ultimately, the judge upheld the first appellate authority's decision, stating that the High Court judgment supported the assessee's position. The appeal by the Revenue was deemed meritless, and the impugned order was upheld as correct and legal without any infirmity. The appeal was rejected, and the judgment was pronounced on 18.7.2014.