2013 (5) TMI 143 - AT - Service Tax

Entitlement to Cenvat credit of Service Tax paid on commission paid to overseas agents under the category of Business auxiliary services denied - Held that - The issue is no more res integra as settled in the case of Cadila Healthcare Ltd. v. CCE 2009 (8) TMI 172 - CESTAT, AHMEDABAD wherein held that foreign commission agent services are admissible cenvatable services inasmuch as the same are for sale promotion. Also see CCE v. Ambika Forgings (2010 (9) TMI 240 - CESTAT, NEW DELHI) laying down that overseas commission agent services promotes the assessee s business activities and adds to Revenue earning by manufacture and sale of incremental quantity, activity may have nexus to such sales and Service Tax paid on such services has to be held as includable in the definition of inputs services - in favour of assessee.

Summary

Issues involved:
Entitlement to Cenvat credit of Service Tax paid on commission to overseas agents under Business auxiliary services.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi, involved the issue of whether the appellants were entitled to the Cenvat credit of Service Tax paid on commission to overseas agents under the category of Business auxiliary services. The Revenue contended that such overseas agents' services did not fall under the definition of input services, leading to proceedings for the recovery of the credit availed by the appellants and resulting in the impugned orders.

Upon considering the arguments from both sides, the Tribunal found that the issue had been settled by previous decisions. Reference was made to the Tribunal's decision in the case of Cadila Healthcare Ltd. v. CCE [2009] 23 STT 224 (Ahd-CESTAT), where it was established that foreign commission agent services were admissible as cenvatable services for sales promotion. Additionally, another Tribunal decision in the case of CCE v. Ambika Forgings 2010 (259) ELT 593 (Trib.-Delhi) emphasized that overseas commission agent services contributed to promoting the assessee's business activities and revenue earning, thereby having a nexus to sales and justifying the inclusion of Service Tax paid on such services in the definition of input services.

Based on the settled nature of the issue, the Tribunal set aside the impugned orders and allowed all the appeals, granting consequential relief to the appellants. The judgment clarified the admissibility of Cenvat credit for Service Tax paid on commission to overseas agents under Business auxiliary services, aligning with the precedents established by previous Tribunal decisions.