Commissioner allows Cenvat credit on service tax paid to overseas agents for export orders

The Commissioner (Appeals) upheld the appellant's eligibility for Cenvat credit on service tax paid to overseas commission agents for procuring export orders. The service was deemed an input service crucial for the business, not limited to the factory or depot. The Revenue's appeal challenging this decision was dismissed as the service fell within the definition of 'input service' covering activities related to marketing, sales promotion, and business. The interpretation of 'input service' was not restricted to the factory or depot, leading to the dismissal of the Revenue's appeal.

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Issues:
1. Eligibility for Cenvat credit of service tax on commission paid to overseas commission agents for procuring export orders.

Analysis:
The only issue in this case revolved around the eligibility of the appellant for Cenvat credit of service tax on commission paid to overseas commission agents for procuring export orders. The department contended that the service received from commission agents abroad did not qualify as an input service, specifically Business Auxiliary Service. Three show cause notices were issued by the department for denial of Cenvat credit, totaling specific amounts along with interest and penalties. The Deputy Commissioner confirmed these demands, but on appeal to the Commissioner (Appeals), the order was set aside. The Commissioner (Appeals) deemed the service of procuring export orders from overseas commission agents as an input service, crucial for the business, and not limited to the factory or depot. Consequently, the Revenue filed an appeal against this decision.

Upon hearing the arguments, the Revenue's appeal was decided ex parte as the respondent did not appear. The Revenue challenged the Commissioner (Appeals) decision, arguing that the service of commission agents abroad for procuring export orders did not have a nexus with the manufacturer of the final product, hence could not be considered an input service. However, after careful consideration of the submissions and case records, it was established that the appellant received Business Auxiliary Service from overseas commission agents for procuring export orders, paying service tax as a recipient. The service fell within the definition of 'input service' during the dispute period, covering activities like advertisement, sales promotion, and business-related activities. As the service of procuring export orders constituted marketing, sales promotion, and was related to the manufacturing business of the appellant, it was deemed eligible for Cenvat credit. The interpretation of 'input service' was not restricted to the factory or depot, as highlighted by the Commissioner (Appeals). Consequently, the impugned order was upheld, and the Revenue's appeal was dismissed.

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