2018 (9) TMI 22 - AT - Central Excise

CENVAT credit - input services - Services of commission agents to develop its market and promote the sales - Held that - An identical issue has come up before the Tribunal in the case of M/s Mangalam Cement Ltd. vs. 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 allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of Cenvat Credit on Service Tax paid on commission agents.

Analysis:
The appellant, engaged in manufacturing various products falling under the Central Excise Tariff Act, availed the services of commission agents for market development and sales promotion during the period of dispute. The Service Tax paid on such commission was claimed as Cenvat Credit. However, the authorities disallowed this credit, leading to the appellant filing an appeal against Order-in-Appeal No. 73/2018 dated 22/03/2018.

During the proceedings, the appellant's counsel argued that similar issues had been decided in favor of appellants by the Tribunal in previous cases, notably referring to Final Order No. 57218/2017 dated 10/10/2017 in the case of National Engineering Industries Ltd. v/s Commissioner, Jaipur-I. The counsel contended that based on these precedents, the appeal should be allowed.

On the other hand, the Departmental Representative supported the impugned order disallowing the Cenvat Credit on Service Tax paid on commission agents.

The Tribunal, after considering the arguments from both sides, referred to a previous case involving M/s Mangalam Cement Ltd. vs. CCE, Udaipur. In this case, it was noted that Circular No. 943/4/2011-CX clarified the admissibility of Cenvat Credit on commission paid for sale promotion activities. The Tribunal also highlighted conflicting views from different High Courts but ultimately relied on a notification from 2016 to interpret the law. The Tribunal concluded that the notification should be considered declaratory in nature and effective retrospectively, in line with previous decisions such as in the case of Essar Steel India Ltd.

Based on this settled legal position, the Tribunal found no merit in the impugned order disallowing the Cenvat Credit. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellant. This decision was consistent with a previous order, and the impugned order was overturned in favor of the appellant.