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2018 (2) TMI 1035 - AT - Service TaxCENVAT credit - input services - sales promotion - Held that - reliance placed in the case of BHURUKA GASES LTD. Versus COMMISSIONER OF C. EX. CUS. & S.T. BANGALORE-I 2014 (1) TMI 1662 - CESTAT BANGALORE where it was held that Canvassing and procuring order were in relation to sales promotion and would fall under sales promotion activity - appeal allowed - decided in favor of appellant.
Issues:
1. Entitlement to CENVAT credit for service tax paid on sales promotion activities. Detailed Analysis: The appeal was filed against Order-in-Original No.29/2009 dated 5.1.2010 by a manufacturing company engaged in producing machines falling under Chapter 84 of the Central Excise Tariff Act, 1985. The appellant availed CENVAT credit for service tax paid by their commission agent, M/s. Francis Klein, under the category of Business Auxiliary Service. The department contended that the service tax credit was not admissible as it was related to sales activities post-manufacture and clearance of goods. Consequently, a show-cause notice was issued, disallowing the service tax credit of ?53,06,650, along with interest and penalties under the Central Excise Act. The appellant challenged this order through the present appeal. During the hearing, the Tribunal considered previous cases, particularly the decision in Bhuruka Gases Ltd. vs. CCE, Bangalore, where it was established that if agents undertook sales promotion activities, the credit would be admissible. The Tribunal noted that the agents in the present case had indeed engaged in sales promotion activities, as evidenced by letters and agreements indicating their role in canvassing business, finding new customers, and procuring orders. Relying on this precedent, the Tribunal set aside the impugned order and allowed the appeal, granting the appellant entitlement to the CENVAT credit for the service tax paid on sales promotion activities. Therefore, the Tribunal's decision was based on the interpretation that the service tax paid on sales promotion activities by the appellant's commission agent qualified as an input service under the CENVAT Credit Rules, 2004. The Tribunal's analysis emphasized the importance of establishing that the agents were involved in sales promotion to determine the admissibility of the CENVAT credit, ultimately ruling in favor of the appellant and overturning the disallowance of the service tax credit.
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