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TMI Blog2019 (7) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... he agency agreement reproduced above clearly indicate that the services provided by them are in the nature of sales promotion activities in addition to the service as Del Credere Agent, hence, fall within the scope of definition of input service as prescribed under Rule 2(l) of the Cenvat Credit Rules, 2004 - the amount of service tax paid to these commission agents have been rightly held by the Commissioner is in the nature of sales promotion, accordingly, eligible to cenvat credit - credit allowed. Whether the appellant-assessee has correctly availed cenvat credit on the input service invoices issued by their office as ISD prior to 01.03.2006, when the registered address was different? - HELD THAT:- At the relevant time, their Satellite office was a unit included in the list of units for distribution of credit submitted to the department. However, later, due to shifting of the business operations to Satellite office, change of address in the ISD Registration Certificate was requested and allowed from 1st March 2006 - credit should not be denied merely for procedural irregularities - credit allowed. Appeal allowed - decided in favor of appellant. - Appeal No. E/1526, 162 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omer on the due date and in case of default on the part of the customer, the appellant was free to recover the defaulted amount from the agents. 4. Referring to the sample copy of the agreement between the appellant and the agents, particularly clause 3, clause 7, clause 8 and clause 10 of the said agreement and also referring to the meaning and definition of Del Credere agent mentioned under different dictionaries, various books on Indian Contract Act, the learned Advocate has submitted that the agents appointed by the appellant were mainly sales promotion rendering service of the goods manufactured by the assessee. Further, he has submitted that the commissions paid to the agents were not merely for guaranteeing the collection of defaulted amount but also were required to undertake the sales promotion, furnish market information etc. to the appellant. It is their contention that the commissions paid to these agents were nothing but sales promotion being in the primary function and the collection of the defaulted amount is incidental and ancillary to the said function. Further, the learned Advocate has submitted that the commissions paid to commission agents are he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by the agents cannot be called as commission agent, as they do not undertake sales promotion. Hence, such activity falls outside the scope of definition of input service defined under Rule 2(l) of the Cenvat Credit Rules, 2004. Further, the learned AR for the Revenue has submitted that the invoices issued prior to 01.03.2006 on which the assessee has availed credit cannot be considered as valid document as held by the Commissioner, since during the said period their Satellite office was not registered as input service distributor. 8. Heard both sides and perused the records. 9. The limited issues involved in the present appeals for determination are: (i) Whether the appellant-assessee is eligible to avail cenvat credit of service tax paid on commissions to Agents who sell the goods and undertake the guarantee of payment; (ii) Whether the appellant-assessee has correctly availed cenvat credit on the input service invoices issued by their office as ISD prior to 01.03.2006, when the registered address was different. 10. Before analyzing the issues, it is relevant to scrutinize the relevant clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... likely purchases of the Products by its customers prior to the commencement of each month. The Agent further agrees to furnish to IPCL the true and correct information and details regarding the financial soundness, reputation and goodwill of the customers and the general market conditions and such other information as may be required by IPCL from time to time. 11. A plain reading of Clause 3 of the agreement makes it clear that the agents are required to promote the sale of the products to their best of ability and salesmanship; also in Clause 7, it is stipulated that the agents responsibility is to collect the payments from the customers. Clause 8 of the agreement prescribes that the agents shall indemnify the appellant fully against the defaulted amount with interest as may be decided by the appellant. Clause 10 stipulates about the estimates relating to likely purchases of the products of the appellant at the beginning of each calendar month and also the requirement to furnish the details of financial conditions of the customer and general market conditions to the appellant. 12. Reading these stipulations cumulatively, there cannot be any doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cenvat Credit Rules, 2004. 14. The commission agent also includes a Del Credere agent is clear from the definition of Business Auxiliary Service under which service tax is levied on commission agents, which reads as follows:- Business Auxiliary Service means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; [Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client;] (v) production or processing of goods for, or on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, in view of the principle of law laid down by the Hon ble Gujarat High Court in the case of Dashion Ltd. (supra). Their Lordships analyzing the issue observed that for non- registration as an ISD, credit cannot be denied. Their Lordships observed as below:- 7. The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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