2018 (1) TMI 463 - AT - Central Excise

CENVAT credit - input services - commission to various agents for promotion of sale - Held that - the commission paid on the Sales Promotion falls under the definition of Input Services - 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 - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Department's appeal against Order-in-Appeal allowing commission paid for sales promotion as input services under Central Excise rules for the period October 2011 to May 2014.

Analysis:
The Department filed an appeal against the Order-in-Appeal allowing commission paid for sales promotion as input services. During the period in question, the assessee was engaged in manufacturing various products and had paid commissions to agents for sales promotion. The Commissioner (Appeals) permitted the claim, leading to the Department's appeal. The Tribunal noted that the commission paid for sales promotion falls under the definition of 'Input Services.' Referring to a previous case, the Tribunal highlighted that Cenvat credit on commission for sales promotion activities is admissible as clarified by CBEC Circular No. 943/4/2011-CX. The Tribunal emphasized that the circular was endorsed by the Central Government, making it declaratory in nature and effective retrospectively. The Tribunal cited conflicting judgments by different High Courts and concluded that the Explanation inserted in Rule 2(l) of Rules, 2004, by Notification No. 2/2016-CX (N.T.) should be considered declaratory and effective retrospectively.

The Tribunal, based on the settled legal position and law, found no merit in the impugned orders and allowed the appeals in favor of the appellants. Upholding its earlier decision and considering the facts and circumstances of the case, the Tribunal decided not to interfere with the impugned order, thereby dismissing the Department's appeal. The judgment was dictated and pronounced in open court, bringing the matter to a close.