2018 (5) TMI 914 - AT - Central Excise

CENVAT credit - input services - sales commission for the sale of party s manufactured products - Department has been of the view that the sales activity does not pertains to the promotion of the assessee s product - Held that - The Central Government vide N/N. 2/2016-CE (ST) dated 03/02/2016 has amended the definition of input services under Rule 2 (l) of the CCR - Cenvat credit became available on services of sales commission agents also. Whether the insertion in the definition is clarificatory in nature having retrospective effect or only prospective? - Held that - This aspect had also been settled by this Tribunal in its judgment in case of Essar Steel India Ltd. vs. CCE & ST, Surat I 2016 (4) TMI 232 - CESTAT AHMEDABAD , wherein this Tribunal has held that Sometimes, the explanation may be inserted to clarify a doubtful point of law, which would be effectively retrospectively. Appeal dismissed - decided against Revenue.

Summary

Issues:
Department's appeal against Commissioner (Appeals) order on Cenvat credit for service tax paid on sales commission.

Analysis:
The appeal involved the issue of whether availing Cenvat credit for service tax paid on sales commission by M/s Shree Rathi Steel (Dakshin) Ltd. was valid under Rule 2(l) of the Cenvat Credit Rules, 2004. The Department contended that the sales activity did not promote the assessee's product directly or indirectly, thus not falling under the definition of input service. However, the Tribunal referred to a notification amending the definition of 'input services,' clarifying that sales promotion included services by sale of dutiable goods on commission basis. This clarification was deemed retrospective in nature, as explained in the judgment of Essar Steel India Ltd. vs. CCE & ST, Surat. The Tribunal cited various cases, including M/s Mangalam Cement Ltd., to support the allowance of Cenvat credit on sales commission services.

The Tribunal concluded that the issue was settled law based on previous judgments and the retrospective nature of the clarification regarding sales promotion services. Citing the decision in Essar Steel India Ltd., the Tribunal upheld the validity of availing Cenvat credit on service tax paid for sales commission. The Tribunal found no merit in the Department's appeal against the Commissioner (Appeals) order and dismissed the appeal accordingly. The order was pronounced on 14/05/2018.