Sales promotion services treated as input service, allowing CENVAT credit for commission-based canvassing and order procurement.

Commission paid to a sales agent for canvassing business, expanding the customer base and procuring orders was treated as sales promotion and therefore qualified as input service under Rule 2(l) of the CENVAT Credit Rules, 2004. The Tribunal applied earlier precedent to hold that services directly directed towards selling products and obtaining orders fall within the input service definition, so the denial of CENVAT credit was unsustainable. Interest and penalty also failed for the same reason.

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Issues: Whether commission paid to a sales agent for canvassing business and procuring orders qualifies as input service for CENVAT credit under Rule 2(l) of the CENVAT Credit Rules, 2004.

Analysis: The Tribunal noted that the agent's activities included contacting customers, canvassing business, expanding the customer base, and procuring orders. Relying on earlier Tribunal precedent and the principle that sales promotion includes activities directed towards selling the products and procuring orders, it held that such commission-related services fall within the scope of input service. The disallowance of credit, interest, and penalty was therefore unsustainable.

Conclusion: The issue was decided in favour of the assessee and the CENVAT credit was held admissible.

Ratio Decidendi: Services rendered for canvassing business and procuring orders amount to sales promotion and are admissible as input service under Rule 2(l) of the CENVAT Credit Rules, 2004.

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