2017 (12) TMI 891 - AT - Central Excise

Denial of input service credit on sales commission unjustified. Tribunal clarifies admissibility, emphasizes legislative intent.

The Tribunal found that the denial of input service credit on selling commission paid to commission agents was not justified. Relying on previous ... CENVAT credit - input service - selling commission paid to commission agents - Held that: - identical issue has came up before the Tribunal in the assessee’s own case as Ultratech Cement Ltd. Vs. CCE, Jaipur [2017 (12) TMI 882 - CESTAT NEW DELHI], where reliance was placed in the case of M/s Mangalam Cement Ltd., M/s J.K. Lakshmi Cement Ltd, M/s K.E.I. Industries Ltd Versus CCE, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that the CBEC vide Circular No. 943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - appeal allowed - decided in favor of appellant. Issues:Denial of input service credit on selling commission paid to commission agents under Rule 2(l) of the Cenvat Credit Rules, 2004.Analysis:The judgment deals with the denial of input service credit on selling commission paid to commission agents. The issue revolves around whether these services fall within the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal examined a similar issue in a previous case involving Ultratech Cement Ltd. where it was observed that the services of commission agents are covered by the scope of 'input services.' The appellant contested the denial of credit, citing a clarification issued by the Board and a notification allowing cenvat credit on sales commission agent services. The Tribunal referred to a Circular clarifying that Cenvat credit is admissible on commission paid for sale promotion activities. It considered conflicting judgments of different High Courts and held that the notification should be considered declaratory and effective retrospectively. Following this reasoning, the Tribunal set aside the impugned order and allowed the appeal.In conclusion, the Tribunal found that the denial of input service credit on selling commission paid to commission agents was not justified. The Tribunal relied on previous decisions, Circulars, and notifications to establish that such services are covered under the definition of 'input services.' By considering the legislative intent and clarifications provided, the Tribunal held that the denial of credit was unfounded. The judgment provides clarity on the admissibility of Cenvat credit on sales commission agent services and emphasizes the importance of interpreting rules and notifications in line with the legislative intent.