Cenvat credit on sales commission for traded goods lacks nexus with manufacture and can attract extended limitation for nondisclosure.

Cenvat credit under Rule 2(l) is confined to services used directly or indirectly in manufacturing final products or clearing them from the place of removal, so commission paid for procuring orders relating to traded goods has no requisite nexus and credit attributable to that trading activity is not admissible. Where such commission-related credit was not disclosed and surfaced only on verification of contractual and commission documents, the extended limitation period was sustained and the limitation objection failed. The result was that the denial of credit, along with the demand, interest and penalty, was upheld.

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Issues: (i) Whether Cenvat credit on sales commission attributable to traded goods was admissible under Rule 2(l) of the Cenvat Credit Rules, 2004; (ii) Whether the demand was barred by limitation.

Issue (i): Whether Cenvat credit on sales commission attributable to traded goods was admissible under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: Rule 2(l) permits credit only for services used directly or indirectly by a manufacturer in or in relation to the manufacture of final products and clearance of final products from the place of removal. The credit was allowed only for the manufactured portion of the contract and denied for the portion relating to traded goods, since commission paid for procuring orders relating to trading activity had no nexus with manufacture of final products.

Conclusion: Cenvat credit on commission relatable to traded goods was not admissible and the denial of credit was upheld.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The authorities recorded that the availment of credit on commission relating to trading activity was not disclosed and came to light only on verification of contractual and commission documents. On that basis, the extended period and consequential demand were sustained.

Conclusion: The plea of limitation was rejected.

Final Conclusion: The appeal failed on both admissibility of credit and limitation, and the revenue's demand, interest and penalty were sustained.

Ratio Decidendi: Cenvat credit under Rule 2(l) is confined to services having a direct or indirect nexus with manufacture and clearance of final products, and credit attributable to trading activity is not allowable; suppression of material facts justifies invocation of the extended limitation period.

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