2018 (8) TMI 1385 - AT - Central Excise

CENVAT credit - reverse charge mechanism - credit of service tax paid to the commission agent who affected their sales outside India - Held that - The assessee is entitled to take the cenvat credit on service tax paid commission to the commission agent who has affected the sales on behalf of the assessee - reliance placed in the case of Dwarikesh Sugar Industries Ltd. 2017 (10) TMI 1114 - CESTAT, ALLAHABAD , where it was held that appellants are entitled to avail Cenvat credit on commission paid to the selling agent for selling the goods in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Whether the respondent-assessee is entitled to avail cenvat credit on commission paid to the commission agent who affected the sale on behalf of the respondent.

Analysis:
The appeal was filed by the Revenue against an order allowing cenvat credit for service tax paid to a commission agent for sales outside India under reverse charge mechanism. The Revenue contended that as per decisions by the Gujarat High Court and the Supreme Court, the respondent was not entitled to avail cenvat credit. The respondent, represented by an advocate, relied on a different case law and argued in favor of affirming the impugned order. After hearing both parties, the Tribunal identified the key issue as the entitlement of the respondent to cenvat credit on commission paid to the commission agent for sales. The Tribunal referred to a previous case involving Dwarikesh Sugar Industries Ltd. where it was concluded that the assessee is indeed entitled to take cenvat credit in such situations.

The Tribunal's decision was based on a detailed analysis of relevant case laws, including the Cadila Healthcare Ltd. case and the Ambika Overseas case. It was noted that the Gujarat High Court's decision did not consider the issue of marketing or sale of goods by the commission agent, which was crucial in determining eligibility for cenvat credit. The Tribunal also referenced a judgment by the Punjab & Haryana High Court supporting the admissibility of cenvat credit on service tax paid to a selling agent for the sale of goods. In light of conflicting judgments, the Tribunal independently decided the issue, aligning with its previous ruling in the Essar Steel India Ltd. case. The Tribunal emphasized that the assessee is entitled to avail cenvat credit on commission paid to the selling agent for selling goods, as per Rule 2(l) of the Cenvat Credit Rules, 2004.

Ultimately, the Tribunal upheld the impugned order, stating that the assessee is entitled to take cenvat credit on service tax paid as commission to the commission agent for sales made on behalf of the assessee. The decision was based on the settled issue following previous judgments and independent analysis by the Tribunal. As a result, the appeal by the Revenue was dismissed, and cross objections were disposed of accordingly.