Cenvat credit on overseas commission services can extend to service tax paid under reverse charge where input-service use is shown.

Service tax paid on overseas commission agent services was treated as potentially eligible for Cenvat credit where the services were used as input services for the manufacturer or output service provider. Although the Commissioner (Appeals) had viewed such services as outside Rule 2(l) of the Cenvat Credit Rules, 2004, the later Board circular clarified that tax paid under Section 66A of the Finance Act, 1994 may be available as input credit when the underlying services satisfy the input-service test. On that prima facie basis, the tax paid on overseas commission was regarded as connected with the goods manufactured, and pre-deposit of duty and penalty was waived pending appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit of duty and penalty on the prima facie view that service tax paid on overseas commission agent services could be taken as input credit under the Cenvat Credit Rules, 2004.

Analysis: The order noted the Commissioner (Appeals)' view that the services did not qualify as input service under Rule 2(l) of the Cenvat Credit Rules, 2004, while also noticing the Board's later circular clarifying that service tax paid under Section 66A of the Finance Act, 1994 is available as input credit if the services are used as input services by the manufacturer or provider of output taxable service. On the facts, the order recorded a prima facie view that the tax paid on overseas commission was related to the goods manufactured by the appellants.

Outcome: Pre-deposit of duty and penalty was waived till disposal of the appeal and the stay application was allowed.

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