Tribunal allows appeal on CENVAT Credit for Service Tax paid to foreign national

The Tribunal allowed the appeal against the disallowance of CENVAT Credit on Service Tax paid for services from a foreign national. The appellant was found eligible for the credit as the commission paid to overseas persons was for procuring orders for goods manufactured by the appellant, making it part of the appellant's business activity. The Tribunal relied on previous judgments to support its decision, setting aside the order disallowing the credit and allowing the appeal.

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Issues: Appeal against disallowance of CENVAT Credit on Service Tax paid for services from foreign national.

Analysis:
The appeal was filed against Order-in-Original No. 06/DEM/Vapi/2009, which disallowed the CENVAT Credit on Service Tax paid by the appellant for services from a foreign national to obtain orders from foreign countries. The Counsel argued that the issue was settled by various decisions, including CCE Ludhiana Vs Ambika Overseas and Bodal Chemicals Ltd Vs. CCE Ahmedabad. The Counsel highlighted that the judgment of the Hon'ble High Court of Karnataka followed by the Hon'ble High Court of Punjab & Haryana in Ambika Overseas case was relevant, especially considering the period before 31.03.2008.

Upon reviewing submissions and records, it was found that the adjudicating authority disallowed the CENVAT Credit based on the appellant's ineligibility under Rule 2(l) of CENVAT Credit Rules, 2004. However, it was noted that the commission paid to overseas persons was for procuring orders for goods manufactured by the appellant. The Service Tax liability under Section 66A should have been discharged by the commission receiver, making the appellant eligible for CENVAT Credit. The activity of paying commission during the relevant period was deemed part of the appellant's business activity.

The Tribunal concluded that the issue was squarely covered by the judgments of the Hon'ble High Court of Karnataka in the case of ABB Ltd. and the Hon'ble High Court of Punjab & Haryana in the case of Ambika Overseas. Therefore, the impugned order disallowing the CENVAT Credit was set aside, and the appeal was allowed.

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