2017 (10) TMI 1056 - AT - Service Tax

CENVAT credit - commission paid to sale agent for sale of the goods - denial on the ground that such commission agents are not engaged in the activity of sales promotion - Held that - reliance placed in the case of Essar Steel India Ltd. 2016 (4) TMI 232 - CESTAT AHMEDABAD wherein it has been held that the assessee is entitled to avail Cenvat credit for commission paid to the commission agent who effected the sale of goods manufactured by the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues: Cenvat credit denial on commission paid to sales agent.

In this judgment by the Appellate Tribunal CESTAT ALLAHABAD, the issue revolved around the denial of Cenvat credit to the appellant on the commission paid to a sales agent for the sale of goods, citing non-qualification under Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal noted that in a previous case involving the same appellant, Cenvat credit had been allowed despite the rejection by the Commissioner (Appeals) based on a decision by the Hon'ble Gujarat High Court. The Tribunal examined the decision of the Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise, Ahmedabad-II Versus Cadila Healthcare Ltd., which held that commission agents are not engaged in sales promotion. However, the Tribunal referenced its own decision in the case of Essar Steel India Ltd. Versus Commissioner of Central Excise & Service Tax, Surat-I, where it was held that the appellant is entitled to avail Cenvat credit for commission paid to the agent who facilitated the sale of goods. Additionally, the Tribunal highlighted a judgment by the Hon'ble High Court of Punjab & Haryana, which supported the admissibility of Cenvat credit on service tax paid to selling agents for the sale of goods.

Furthermore, the Tribunal emphasized that in the presence of contradictory judgments, it was imperative to independently decide the issue. Referring to the decision in the case of Maheshwari Solvent Extraction Ltd. Versus Commissioner of Central Excise, Nagpur, the Tribunal asserted that in the face of conflicting views, the Adjudicating Authority has the autonomy to take a stance on the merits of the case. Ultimately, the Tribunal, aligning with its previous rulings and the decision in the case of Essar Steel India Ltd., concluded that the appellants were indeed entitled to avail Cenvat credit on the commission paid to the selling agent for the sale of goods as per Rule 2(l) of the Cenvat Credit Rules, 2004. This stance was consistent with a similar view taken by the Tribunal of Allahabad in a previous case involving M/s Dwarikesh Industries Sugar Ltd. and ors. The impugned order was set aside, and the appeals were allowed with any consequential relief deemed necessary.