2019 (4) TMI 170 - AT - Central Excise

CENVAT Credit - input services - commission agent service utilized for its business - sales promotion activity or not - Held that - Identical issue has been considered by this Tribunal in the case of BELOORBAYIR BIOTECH LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE 2018 (5) TMI 24 - CESTAT BANGALORE and this Tribunal has allowed the appeal of the appellant by holding that The commission paid on sales becomes part of sales promotion resulting in increased manufacturing activity - credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of CENVAT credit on commission agent services for specific periods.

Analysis:
The appeals were filed against the order by the Commissioner(Appeals) rejecting the CENVAT credit availed on commission agent services. The appellants were involved in the manufacture and supply of critical control valves and were utilizing the services of commission agents for business promotion. The Joint Commissioner issued show-cause notices demanding the CENVAT credit availed by the appellants for specific periods. The Joint Commissioner held that the service provided by the commission agents fell under the definition of input service as per CENVAT Credit Rules, disallowing the credit amount. The appeals were filed against this decision.

The appellant argued that the impugned order was not sustainable as it did not consider the facts and law properly. They referred to a notification clarifying that sales promotion includes services by selling goods on commission basis. The appellant cited various tribunal decisions supporting their claim, such as Essar Steel India Ltd. vs. CCE&ST, Surat and others. The Assistant Commissioner defended the impugned order.

Upon reviewing the submissions and evidence, the Tribunal found that a similar issue had been addressed in a previous case, Beloorbayir Biotech Ltd., where the appeal was allowed. The Tribunal noted that sales commission directly contributed to product sales and was deemed a sales promotion activity. The commission was paid to boost company sales, directly linked to manufacturing products. The Tribunal also referenced Essar Steels India Pvt. Ltd., stating that a clarificatory explanation in CENVAT Credit Rules applied retrospectively. Consequently, the Tribunal held the impugned order unsustainable and allowed the appeals, setting aside the Commissioner(Appeals)'s decision.

In conclusion, the Tribunal ruled in favor of the appellant, allowing both appeals and setting aside the order disallowing the CENVAT credit on commission agent services. The decision was pronounced in open court on 19/03/2019.