2018 (3) TMI 747 - AT - Central Excise

Tribunal Allows CENVAT Credit for Input Services, Dismisses Revenue's Appeal

The Tribunal concluded that the respondent's availed service fell within the scope of 'input service,' allowing the CENVAT credit. The Revenue's demand of ... CENVAT credit - sales commission for domestic, as well as on export sale - Is the credit of Business Auxiliary Service on account of sales commission now disallowed after the deletion of expression ‘activities related to business’? Held that: - On perusal of the definition of ‘input service’ in rule 2(l) of CENVAT Credit Rules, 2004, it is seen that inclusive portion specifically enumerates ‘advertisement of sale promotion’. It is also seen that the products manufactured by the respondent are tailor-made to meet the requirement of the customers. Consequently, any commission paid to agents has its genesis in placing of the order which by no stretch, is a post-removal activity. The service availed by the respondent would not be outside scope of ‘input service’ and disallowance of CENVAT credit sought by Revenue is without merit - appeal dismissed - decided against Revenue. Issues:Dispute over availment of CENVAT credit for tax paid on sales commission for domestic and export sales under 'business auxiliary service.'Analysis:The Revenue contended that CENVAT credit was irregularly availed due to a limited definition of 'input service,' resulting in a demand of Rs. 24,00,483. The Commissioner set aside the demand, leading to the appeal.The Authorized Representative cited a decision from the High Court of Gujarat in support of the Revenue's position.The Consultant for the respondent referenced a circular clarifying that credit is admissible on services of sale of dutiable goods on commission basis.The issue revolved around whether the credit of Business Auxiliary Service on sales commission was disallowed after a change in the definition. The Tribunal clarified that credit is admissible for services used for clearance of final products up to the place of removal, including sale promotion activities.Additionally, the Tribunal referred to a decision from the High Court of Punjab & Haryana, which supported the inclusion of sales promotion activities under the definition of input services.The Tribunal analyzed the definition of 'input service' in the CENVAT Credit Rules, noting that advertisement of sale promotion is explicitly included. It emphasized that commission paid to agents is part of placing orders, not post-removal activities.Ultimately, the Tribunal concluded that the service availed by the respondent fell within the scope of 'input service,' and the disallowance of CENVAT credit by the Revenue was unjustified, leading to the dismissal of the Revenue's appeal.