2017 (11) TMI 414 - AT - Central Excise

CENVAT credit - input service - commission paid to Foreign Commission Agent - Rule 2(l) of CCR, 2004 - Held that - the appellant have submitted certificate from the service provider who have certified that they involved in various activity such as to promote the product, visiting the buyer, taking part in exhibition and advertisement. As per this activity, it is clear that service provided by the foreign service provider is of sales promotion. The sales promotion service is clearly mentioned in the inclusion part of the input service definition under Rule 2(l) - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether Service Tax paid on commission to Foreign Commission Agent is eligible for Cenvat credit under Rule 2(l) of Cenvat Credit Rules, 2004.

Analysis:
The appellant contended that the denial of Cenvat credit by the Ld. Commissioner (Appeals) was based on a judgment where the nature of service was not on record, leading to the conclusion that the commission paid to the foreign agent was not related to sales promotion activity. However, in the present case, the foreign service providers were engaged in various activities like product promotion, buyer visits, exhibition participation, and advertisement, all constituting sales promotion services. The appellant provided certificates from the service providers confirming the nature of services, which were considered valid. The Tribunal noted that the service provided by the foreign agents fell under the definition of sales promotion service, an inclusion in the definition of input service under Rule 2(l). Therefore, the appellant was deemed eligible for Cenvat credit.

The Revenue, represented by the Ld. Addl. Commissioner (A.R.), reiterated the findings of the impugned order, citing a previous judgment where similar services were deemed inadmissible as input services. Following the precedent set by the earlier judgment, the Revenue argued against granting Cenvat credit for the services received by the appellant.

After considering the submissions from both sides and reviewing the records, the Tribunal observed that the denial of Cenvat credit by the Ld. Commissioner (Appeals) was based on the inability of the assessee to present the nature of services received. The Tribunal distinguished the present case from the previous judgment by highlighting the certificates provided by the service providers, confirming their involvement in sales promotion activities. The Tribunal emphasized that sales promotion services were explicitly included in the definition of input services under Rule 2(l). By analyzing the nature of services provided by the foreign agents, the Tribunal concluded that the services qualified as sales promotion services and were eligible for Cenvat credit. Consequently, the impugned order was set aside, and the appeal was allowed.