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TMI Blog2017 (1) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... and 76 of the Central Excise Tariff Act (CETA) and are availing credit of Central Excise duty paid on input and input services under CENVAT Credit Rules (CCR), 2004. The appellants are also availing credit of service tax paid on sales commission to a few of the parties. Appellant had availed credit of Rs. 45,32,282/- comprising of service tax, education cess and secondary education cess for the period from March 2007 to December 2008 on such sales commissions. The Additional Commissioner of Central Excise, Bangalore treated the same as wrong availment of service tax and issued a show-cause notice demanding the same with interest and penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 15 of CCR, 2004. In reply to the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly held that the sales commission has a direct nexus with sales which in turn is related to the manufacture of the product. He further submitted that the commission paid on sales does not fall in the definition of input service as the said service is not used in connection with the manufacture and clearance of final products up to the place of removal. He further submitted that sales commission is a post-sale activity and therefore, not covered as input service as per Rule 2(l) of the CCR, 2004. 5. On the other hand, the learned CA for the assessee defended the impugned order and submitted that the impugned order is based upon correct interpretation of the input service as contained in Rule 2(l) and further the learned Commissioner (A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedents on the same issue. It is pertinent to reproduce the observation of the learned Commissioner (A) while dealing with the whole issue in paragraphs 7 & 8. "7. The sales commission is directly attributable to sales of the products. Any activity which amounts to sale of the products is deemed to be sales promotion activity in the normal trade parlance. The commission is paid on sales of the products/services with an intention to boost the sale of the company. In view of the same, the sales commission has a direct nexus with the sales which in turn is related to the manufacture of the products. It is to be understood that there need not be manufacture unless there is sale of product. To increase the manufacturing activity encouragement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d . * Similarly, in the case of CCE, Ludhiana vs. Rightway Fabrics Pvt. Ltd. [2011 (24) STR 505 (Tri.-Del.)], the Hon'ble Tribunal has dismissed the revenue s appeal holding that, "4. The service received by the respondent from commission agent is of procuring sales orders from the customers for which the commission is paid to the commission agents. This service can be treated as in the nature of sales promotion and in any case, an activity related to business of the manufacturer, as it is an essential activity for sale. Inclusive part of the definition of input service , as given in Rule 2(l) specifically covers advertisement and sales promotion and activities relating to business. Hon'ble Bombay High Court's judgment in the case of C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be treated as input service only if the sales are on FOR destination basis. However, the ratio of this judgment would not be applicable to this case. I also find that the Tribunal in the series of judgment - C.C.E., Raipur v. Bhillai Auxiliary Industries (supra) and C.C.E., Ludhiana v. Abhishek Industries Ltd. (supra) has held that the service of commission agents received by a manufacturer is an input service eligible for Cenvat credit. In view of this, I do not find any infirmity in the impugned order. The Revenue s appeal is dismissed." * The Hon'ble High Court of Punjab and Haryana at Chandigarh in the case of Ambika Overseas [2012 (25) STR 348 (P&H)] while dismissing the appeal filed by the department has affirmed the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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