2015 (10) TMI 1141 - AT - Central Excise

Tribunal Overturns Denial of CENVAT Credit on Sales Commission: Emphasizes Need for Comprehensive Review

The Tribunal set aside the Adjudication order denying CENVAT credit on Sales Commission and invoices issued by ISD before registration. It directed a ... Denial of CENVAT Credit - Sales Commission paid to the Foreign Commission Agent - Held that:-respondent took a stand before the lower authorities that they paid amount on sales promotion activities. No finding was given by the lower authorities. It has also contended that, the demand of tax on the ground that the appellant availed credit on the basis of invoices issued by ISD before registration, which is covered by the decision of the Tribunal, which are also not examined. In my considered view, the Adjudicating Authority should have examined the sales promotion activities as contended by the Learned Advocate. It is also required to examine the case laws in respect of the other issues raised by the respondent. - Matter remanded back - Decided in favour of Revenue. Issues:1. Denial of CENVAT credit on Sales Commission paid to Foreign Commission Agent2. Denial of credit on invoices issued by Input Service Distributor (ISD) before obtaining registrationAnalysis:1. The Revenue appealed against the Commissioner (Appeals) order setting aside the Adjudication order denying CENVAT credit on Sales Commission. The Revenue argued that the respondent is not eligible for credit based on a decision of the Hon'ble Gujarat High Court. The respondent contended that they paid tax on sales promotion activities not covered by the court decision. The Adjudicating Authority failed to examine the nature of sales promotion activities as claimed by the respondent. The Tribunal held that the lower authorities should have examined the sales promotion activities and relevant case laws before denying the credit. The impugned order was set aside, and the matter was remanded for fresh examination.2. The Adjudicating Authority also denied credit based on invoices issued by ISD before registration, which the Tribunal noted were not properly examined. The Tribunal emphasized the need for a thorough examination of this issue along with the relevant case laws cited by the respondent. The Tribunal directed the Adjudicating Authority to reconsider the matter, ensuring proper opportunity for a hearing before passing a new order. Consequently, the appeal by the Revenue was allowed for remand, emphasizing the importance of examining all relevant facts and laws before making a decision.