CENVAT credit on sole selling agency commission is admissible where the service directly promotes sales of manufactured goods.

CENVAT credit was considered admissible on sole selling agency commission where the commission was paid for promoting sales of the manufacturer's products. The commission was treated as an input service under Rule 2(l) of the CENVAT Credit Rules, 2004 because the agents procured orders, boosted sales, and had a direct nexus with sale promotion. Sale and manufacture were viewed as inter-related for this purpose, and the retrospective explanatory amendment to Rule 2(l) was relied on in support of eligibility. Credit was therefore held allowable, and denial of the credit was unsustainable.

---

---

Issues: Whether CENVAT credit was admissible on sole selling agency commission paid for promoting sales of the manufacturer's products.

Analysis: The credit was claimed under the definition of input service in Rule 2(l) of the CENVAT Credit Rules, 2004. The commission was found to be directly attributable to sale promotion because the agents procured orders, boosted sales, and thereby contributed to the manufacturer's production activity. The commission had a direct nexus with the sale of the products, and sale and manufacture were treated as inter-related for the purpose of input service eligibility. The retrospective nature of the explanatory amendment to Rule 2(l) was also relied upon as supporting the assessee's claim.

Conclusion: CENVAT credit on sole selling agency commission was admissible and the denial of credit was unsustainable, in favour of the assessee.

Ratio Decidendi: Commission paid for sales promotion, when directly linked to promotion of the manufacturer's sales, qualifies as input service for CENVAT credit purposes and the benefit cannot be denied merely because the activity is connected with post-manufacture sales efforts.

---