2014 (1) TMI 776 - HC - Service Tax

High Court Upholds CENVAT Credit Decision

Astik Dyestuff Pvt. Ltd. Versus Commissioner of Central Excise And Customs

The High Court dismissed the appeal, upholding the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the eligibility ... Availment of CENVAT Credit - Sales Commission Services - Whether the appellant would be entitled to Cenvat Credit on Sales Commission Services obtained by them - Held that:- appellant has heavily relied upon the CBEC circular dated 29.4.2011 and according to the appellant, as per the CBEC circular dated 29.4.2011, the appellant shall be entitled to Cenvat Credit on Sales Commission Services obtained by them. As contended / submitted on behalf of the appellant, CBEC circular dated 29.4.2011 is binding to the department and therefore, while passing OIO the adjudicating authority ought not have taken a contrary view / decision then the CBEC circular - decision of the jurisdictional High Court is binding to the department rather than the circular issued by the CBEC. If there is any conflict between the jurisdictional High Court and the CBEC circular, the decision of the jurisdictional High Court is binding to the department rather than CBEC circular. Under the circumstances, the contention on behalf of the appellant that the department has erred in taking contrary decision then the CBEC circular, cannot be accepted - Merely because, there might be a contrary decision of another High Court, is no ground to refer the matter to the Larger Bench against the decision of this Court - appellant would not be entitled to Cenvat Credit on Sales Commission Services obtained by them - Following decision of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD – II Versus M/s CADILA HEALTHCARE LTD. [2013 (1) TMI 304 - GUJARAT HIGH COURT] - Decided against assessee. Issues:1. Challenge to the judgment of Customs, Excise and Service Tax Appellate Tribunal2. Eligibility of Cenvat Credit on Sales Commission Services3. Interpretation of All India Statutes regarding CENVAT credit4. Discrimination and injustice in the Tribunal's order5. Relying on Gujarat High Court decision6. Request to refer the matter to a Larger BenchAnalysis:Issue 1: Challenge to the judgment of Customs, Excise and Service Tax Appellate TribunalThe appellant challenged the judgment of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 1.3.2013 by raising substantial questions of law. The questions pertained to the Tribunal's justification in allowing the revenue's appeal without considering contrary decisions, overlooking settled laws, committing errors in legal interpretation, and causing manifest injustice and discrimination.Issue 2: Eligibility of Cenvat Credit on Sales Commission ServicesThe appellant availed Cenvat Credit on Sales Commission Services, which was disputed by the Assistant Commissioner of Central Excise. The Commissioner (Appeals) initially allowed the appeal, but the CESTAT overturned this decision based on the jurisdictional High Court's ruling that Cenvat credit was not permissible on such services. The appellant argued for entitlement to credit based on a circular issued by CBEC and decisions of other High Courts.Issue 3: Interpretation of All India Statutes regarding CENVAT creditThe appellant contended that the CENVAT levy should be uniformly applied across all manufacturers nationwide. However, the Tribunal upheld the order in original, relying on the decision of the jurisdictional High Court regarding the eligibility of Cenvat Credit on Sales Commission Services.Issue 4: Discrimination and injustice in the Tribunal's orderThe appellant argued that the Tribunal's order caused manifest injustice and discrimination by not considering previous cases in favor of the assessee and by relying solely on the Gujarat High Court decision. The appellant claimed that the services of commission agents/brokers should be considered as sales promotions falling under the definition of 'input service.'Issue 5: Relying on Gujarat High Court decisionThe Tribunal primarily relied on the Gujarat High Court decision in Commissioner of Central Excise, Ahmedabad-II vs. Cadila Health Care Ltd. The appellant contested this reliance and questioned the Tribunal's decision to overlook contrary decisions and settle for a mechanical approach in allowing the revenue's appeal.Issue 6: Request to refer the matter to a Larger BenchThe appellant requested to refer the matter to a Larger Bench due to contrary decisions between the jurisdictional High Court and the Punjab and Haryana High Court. However, the court rejected this request, emphasizing that the decision of the jurisdictional High Court prevails, and the matter was already pending before the Supreme Court.In conclusion, the High Court dismissed the appeal, upholding the decision of the CESTAT based on the jurisdictional High Court's ruling regarding the eligibility of Cenvat Credit on Sales Commission Services. The court emphasized the binding nature of the High Court decision over conflicting circulars or decisions from other High Courts.