2018 (4) TMI 1657 - AT - Central Excise

CENVAT Credit - input services - Service Tax on commission paid to sales commission agent who causes sale of Sugar & Molasses manufactured by the appellants - contrary judgements in place - Held that - As there are contrary judgments, in that circumstance without relying on either of the judgment of the Hon ble High Courts, we decide the issue independently in the light of the decision of this Tribunal in the case of Maheshwari Solvent Extraction Ltd. v. Commissioner of Central Excise, Nagpur 2013 (7) TMI 51 - CESTAT MUMBAI wherein it has been held that if there are contrary view of the Apex Court, in that circumstance the Adjudicating Authority is independent to take any view on merits of the case. Therefore, we are taking independent view and hold that appellants are entitled to avail Cenvat credit on commission paid to the selling agent for selling the goods in terms of Rule 2(1) of the Cenvat Credit Rules, 2004 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to avail Cenvat credit of Service Tax on commission paid to sales commission agent.

Analysis:
The primary issue in this appeal was whether the appellant is entitled to avail Cenvat credit of Service Tax on commission paid to a sales commission agent who causes the sale of Sugar & Molasses manufactured by the appellants. The denial of Cenvat credit was based on a decision of the Hon'ble High Court of Gujarat, which held that such commission agents are not engaged in sales promotion. However, the Tribunal, in the case of Essar Steel India Ltd., examined the issue of sales promotion activity under the definition of Business Auxiliary Service. It was clarified that if the agent is engaged in promotion, marketing, or sale of goods produced by the appellant, Cenvat credit is permissible. Additionally, the Hon'ble High Court of Punjab & Haryana in the case of Commissioner of Central Excise, Ludhiana v. Ambika Overseas, allowed Cenvat credit on service tax paid to selling agents for the sale of goods. Given the conflicting judgments, the Tribunal decided independently, referencing the case of Maheshwari Solvent Extraction Ltd., emphasizing that the Adjudicating Authority can take any view on the merits of the case in case of contrary views by the Apex Court. Consequently, the Tribunal held that the appellants are entitled to avail Cenvat credit on commission paid to the selling agent for selling goods in accordance with Rule 2(1) of the Cenvat Credit Rules, 2004.

In conclusion, the impugned order was set aside, and the appeal was allowed with any consequential relief. The Tribunal's decision was made independently, considering the conflicting judgments and the specific provisions of the Cenvat Credit Rules, 2004. The case highlights the importance of interpreting the law in a manner that aligns with the statutory provisions and relevant precedents, ensuring fair treatment and clarity in matters concerning Cenvat credit entitlement for commission paid to sales commission agents.