Cenvat credit on sales commission is admissible where commission-based sales promotion falls within input service coverage.

Cenvat credit was held admissible on service tax paid on sales commission to agents, because commission-based sales promotion fell within the scope of input service and the Board's clarification supported that treatment. The restrictive phrase "up to the place of removal" was not applied to deny credit on the department's approach. Credit was also denied on a ground not set out in the show cause notice, which was impermissible. The appellant therefore succeeded on merits and on the procedural defect in the denial.

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Issues: Whether Cenvat credit of service tax paid on sales commission paid to agents was admissible as input service credit.

Analysis: The circular issued by the Board clarified that credit is admissible on services of sale of dutiable goods on commission basis, and the definition of input service was read harmoniously to include such sales promotion activity. The lower authorities had also travelled beyond the show cause notice by denying credit on a ground not proposed therein. On merits, the restrictive phrase "up to the place of removal" could not be applied to deny credit in the manner suggested by the department.

Conclusion: Cenvat credit on sales commission paid to agents was admissible, and the appellant succeeded.

Ratio Decidendi: Credit on commission-based sales services is admissible where the service falls within the scope of input service and is supported by the Board's clarification, and denial cannot rest on grounds beyond the show cause notice.

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