2017 (8) TMI 1094 - AT - Central Excise

CENVAT credit - scope of input service - commission paid to the selling agents for causing sale of Kraft Paper & M. S. Ingots - Held that - sales promotion was already an item defined as an input service - the respondent-assessee is entitled to input credit on sales promotion or commission paid for sale of their dutiable output/products - appeal dismissed - decided against Revenue.

Summary

Issues:
Entitlement to Cenvat credit on commission paid to selling agents for sale of dutiable products.

Analysis:
The appeal was filed by the Revenue against an Order-in-Appeal where it was held that the appellant is entitled to Cenvat credit on commission paid to selling agents for causing the sale of Kraft Paper & M. S. Ingots, the dutiable products of the appellant. The Revenue's grievance was that the explanation inserted in Rule 2(l) of the Cenvat Credit Rules, 2004, through Notification No. 2/2016-CE (NT) did not have retrospective effect as it did not specifically provide for it, citing section 38A of the Central Excise Act, 1944. However, the Tribunal found that sales promotion was already defined as an input service, and the explanation in the notification only clarified the scope of sales promotion to avoid any confusion. Therefore, the Tribunal held that the respondent-assessee is entitled to input credit on sales promotion or commission paid for the sale of their dutiable products. Consequently, the appeal of the Revenue was dismissed, and the respondent-assessee was granted consequential benefits as per the law. The Stay Application was also disposed of accordingly.