2017 (12) TMI 882 - AT - Central Excise

CENVAT credit - input service - sales commission paid to commission agents in connection with sale - Held that - reliance placed in the case of M/s Mangalam Cement Ltd. M/s J.K. Lakshmi Cement Ltd M/s K.E.I. Industries Ltd Versus CCE Udaipur 2017 (12) TMI 426 - CESTAT NEW DELHI where it was held that the CBEC vide Circular No. 943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - Explanation to Rule 2(l) of Rules says in clear terms that there is no bar on availment of the Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of the appellant to take cenvat credit of service tax paid on sales commission paid to commission agents in connection with the sale of excisable goods.

Detailed Analysis:
The appeal before the Appellate Tribunal CESTAT New Delhi involved the eligibility of the appellant to claim cenvat credit for service tax paid on sales commission to commission agents regarding the sale of excisable goods. The dispute arose when the Original Authority denied the credit, stating that the services provided by the commission agent did not fall within the definition of "input service" as per Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant contested this decision, arguing that the services of commission agents did indeed qualify as "input services." The appellant relied on a clarification issued by the Board and a notification that allowed cenvat credit on sales commission agent services. The appellant also cited various decided cases in support of their claim.

During the proceedings, the Appellate Tribunal noted a similar dispute in the case of Mangalam Cement Ltd. & Ors., where the Tribunal had examined the issue in light of decisions from the Gujarat High Court and Punjab & Haryana High Court. The Tribunal referred to a Circular issued by the CBEC and a subsequent Notification by the Central Government, clarifying that cenvat credit is admissible on services related to the sale of dutiable goods on a commission basis. The Tribunal highlighted conflicting views from different High Courts but ultimately relied on a previous decision to hold that the notification should be considered declaratory and effective retrospectively. Based on this precedent, the Tribunal concluded that the impugned order denying the cenvat credit could not be sustained and therefore set it aside, allowing the appeal in favor of the appellant.

In conclusion, the Appellate Tribunal CESTAT New Delhi, comprising Hon'ble Mr. S.K. Mohanty and Hon'ble Mr. B. Ravichandran, ruled in favor of the appellant regarding the eligibility to claim cenvat credit on service tax paid to commission agents for the sale of excisable goods. The Tribunal's decision was based on a previous ruling and clarifications from the CBEC and the Central Government, which supported the admissibility of cenvat credit in such cases. The judgment set aside the Original Authority's decision and allowed the appeal, emphasizing the retrospective effectiveness of the relevant notification.