2017 (5) TMI 241 - HC - Service Tax

100% EOU - CENVAT credit - commission paid to foreign agents - pre-removal expense or not? - Whether the CESTAT, Chennai erred in its decision which is based solely on the judgment of the CCE, Jallandhar VS Ambika Overseas 2010 (7) TMI 330 - CESTAT, NEW DELHI and that of Ms.Cadila Health Care Ltd., Vs. CCE, Ahmedabad 2009 (8) TMI 172 - CESTAT, AHMEDABAD which has not reached finality as the department has gone on appeal to High Court? - Held that - Given the fact, that one judgment i.e., the judgment rendered in Ambika Overseas has been confirmed by the Punjab and Haryana High Court, whereas, the other judgment i.e., Cadila Healthcare Limited has been reversed by the Gujarat High Court, we are of the view that the matter would have to be remanded to the Tribunal, for a fresh adjudication, on merits. Whether the decision of CESTAT is correct in law as it had not gone into the facts and circumstances of the case in hand in detail and passed the order without discussing in detail the merits of the case which appears to be different than the facts of the case that were relied upon? - Held that - the impugned judgment and order is set aside, with a direction to the Tribunal to decide the matter, on merits, as expeditiously as possible Appeal allowed by way of remand.

Summary

Issues:
Challenging final order of Customs, Excise and Service Tax Appellate Tribunal - Interpretation of Tribunal judgments - Remand for fresh adjudication on merits - Cenvat credit on sales promotion services - Pre-removal expenses - Service tax on commission paid to foreign agents - Duty paid on services.

Analysis:
The appeals were filed under Section 35 G of the Central Excise Act, 1944, challenging the final order of the Customs, Excise and Service Tax Appellate Tribunal, Chennai. The Court framed questions of law for consideration, questioning the correctness of the Tribunal's decision based on previous judgments. The Tribunal's order did not delve into the facts due to the Department's stance that the issue was covered by previous judgments. Notably, one judgment was upheld by Punjab and Haryana High Court, while the other was reversed by the Gujarat High Court, necessitating a remand for fresh adjudication on merits.

The Court highlighted that the Tribunal did not make any observations on the facts due to the Department's reliance on previous judgments. The matter was deemed to require fresh adjudication given the conflicting outcomes of the previous judgments. The Assessee's counsel referenced a judgment clarifying cenvat credit on sales promotion services, indicating retrospective application. The Tribunal was directed to rule on whether expenses on foreign agents' commissions were pre-removal expenses, essential for duty credit.

The Court emphasized the need for the Tribunal to decide on the merits of the case, particularly regarding the nature of services provided by foreign agents. The Assessee had paid service tax on commissions under reverse charge, yet the Revenue did not provide the necessary credit. The impugned judgment was set aside, directing the Tribunal to decide the matter expeditiously, focusing on the nature of services provided by foreign agents and the eligibility for duty credit. The appeals were disposed of without costs.