2014 (10) TMI 281 - AT - Service Tax

Cenvat Credit - input services - whether the appellant are eligible for Cenvat credit of service tax on commission paid to overseas commission agents for procuring export orders for them - Business Auxiliary Service - Held that - The definition of input service during the period of dispute covered the activities of advertisement or sales promotion and also the activities related to business. The service of procuring export order is, obviously, the service of marketing and sales promotion. It is also an activity related to the manufacturing business of the appellant, I, therefore, hold that the service of procuring export orders received by the appellant from the overseas commission agents is covered by definition of input service and the respondent are eligible for Cenvat credit. The Commissioner (Appeals) has rightly held that the definition of input service has to be interpreted in the light of the requirement of the business and it cannot be read restrictively so as to confine only upto the factory or upto the depot of the manufacture. I, therefore, do not find any infirmity in the impugned order - Decided against Revenue.

Summary

Issues:
1. Eligibility for Cenvat credit of service tax on commission paid to overseas commission agents for procuring export orders.

Analysis:
The only issue in this case revolved around the eligibility of the appellant for Cenvat credit of service tax on commission paid to overseas commission agents for procuring export orders. The department contended that the service received from commission agents abroad did not qualify as an input service, specifically Business Auxiliary Service. Three show cause notices were issued by the department for denial of Cenvat credit, totaling specific amounts along with interest and penalties. The Deputy Commissioner confirmed these demands, but on appeal to the Commissioner (Appeals), the order was set aside. The Commissioner (Appeals) deemed the service of procuring export orders from overseas commission agents as an input service, crucial for the business, and not limited to the factory or depot. Consequently, the Revenue filed an appeal against this decision.

Upon hearing the arguments, the Revenue's appeal was decided ex parte as the respondent did not appear. The Revenue challenged the Commissioner (Appeals) decision, arguing that the service of commission agents abroad for procuring export orders did not have a nexus with the manufacturer of the final product, hence could not be considered an input service. However, after careful consideration of the submissions and case records, it was established that the appellant received Business Auxiliary Service from overseas commission agents for procuring export orders, paying service tax as a recipient. The service fell within the definition of 'input service' during the dispute period, covering activities like advertisement, sales promotion, and business-related activities. As the service of procuring export orders constituted marketing, sales promotion, and was related to the manufacturing business of the appellant, it was deemed eligible for Cenvat credit. The interpretation of 'input service' was not restricted to the factory or depot, as highlighted by the Commissioner (Appeals). Consequently, the impugned order was upheld, and the Revenue's appeal was dismissed.