2017 (12) TMI 144 - AT - Central Excise

CENVAT credit - service tax paid on sales commission under the category of Business Auxiliary Service - Held that - the Tribunal in the case of Birla Corporation 2014 (6) TMI 385 - CESTAT NEW DELHI has held that The definition of input service allows all credit on services used for clearance of final products upto the place of removal. Moreover, activity of sale promotion is specifically allowed and on many occasions, the remuneration for the same is linked to actual sale. Reading the provision harmoniously, it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis - credit allowed. CENVAT credit - non-receipt of inputs on the basis of failure of respondents to produce the LR and weighment slips - Held that - In the scheme of Cenvat Credit Rule 9 (5) puts the onus of establishing that the goods were received and used for the intended purpose, is the person availing the credit. The impugned order wrongly puts the onus on the Revenue - A show-cause notice was issued asking the appellant to produce evidence that the goods were received and therefore, the appellants have to discharge the burden of receipt of goods and it is not on revenue to establish that the goods were not received - matter on remand. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Availment of Cenvat Credit on sales commission under Business Auxiliary Service (BAS).
2. Cenvat Credit based on invoice from a supplier without receipt of goods.

Analysis:

Issue 1: Availment of Cenvat Credit on sales commission under BAS
- The Revenue filed two appeals regarding the availing of Cenvat Credit on service tax paid on sales commission under BAS. The argument was based on the decision of the Hon'ble High Court of Gujarat in Cadila Healthcare, emphasizing that the decision in Ultratech Cement Ltd. should not prevail over Cadila Healthcare as the latter specifically dealt with the issue of sales commission.
- The respondents, on the other hand, relied on the decision of the Hon'ble Punjab & Haryana High Court in Ambika Overseas, stating that it supported their case. They highlighted that the goods were purchased from a specific supplier on FOR basis, which explained the absence of weighment slip and LR.
- The Tribunal referred to the circular clarifying that the term "advertisement or sales promotion" covered commission agents' services under BAS. Relying on this circular, the Tribunal allowed the appeal related to Cenvat Credit on service tax paid by the Commission Agent.

Issue 2: Cenvat Credit based on invoice without receipt of goods
- The second issue involved Cenvat Credit taken based on an invoice from a supplier without actual receipt of goods. The Revenue argued that the burden of proof lay with the appellant to establish receipt and usage of goods for the intended purpose.
- The impugned order was criticized for placing the onus on the Revenue to prove non-receipt of goods, contrary to Cenvat Credit Rule 9 (5). The Tribunal found this approach incorrect and remanded the matter to the Commissioner (Appeals) for a fresh decision.
- The Tribunal clarified that the burden of proof regarding the receipt of goods rested with the appellant, and they were required to maintain detailed records for this purpose. The decision highlighted the importance of the appellant discharging the burden of proof regarding the receipt and utilization of goods for claiming Cenvat Credit.

In conclusion, the Tribunal allowed the appeal related to Cenvat Credit on sales commission under BAS based on a circular clarifying the inclusion of commission agents' services under the term "advertisement or sales promotion." However, the issue of Cenvat Credit based on an invoice without receipt of goods was remanded for a fresh decision, emphasizing the appellant's responsibility to establish the receipt and proper usage of goods.