2018 (4) TMI 722 - AT - Service Tax

Tribunal grants Cenvat credit on commission paid to selling agent

M/s Simbhaoli Sugar Ltd. Versus Commissioner of Central Excise, Meerut-II (Now Hapur)

The Tribunal allowed the appeal, setting aside the impugned order and granting the appellant the entitlement to avail Cenvat credit on commission paid to ... CENVAT credit - whether the appellant is entitled to avail CENVAT credit of Service Tax on commission paid to sales commission agent who causes sale of Sugar & Molasses, manufactured by the appellants? - there are contrary judgements on the issue. Held that: - Tribunal in the case of Maheshwari Solvent Extraction Ltd. Versus Commissioner of Central Excise, Nagpur [2013 (7) TMI 51 - CESTAT MUMBAI] wherein it has been held that if there are contrary view of the Apex Court, in that circumstance the Adjudicating Authority is independent to take any view on merits of the case. Therefore, we are taking independent view and hold that appellants are entitled to avail CENVAT credit on commission paid to the selling agent for selling the goods in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant. Issues Involved: Whether the appellant is entitled to avail Cenvat credit of Service Tax on commission paid to sales commission agent.Analysis:The issue in this appeal revolves around the entitlement of the appellant to claim Cenvat credit of Service Tax on the commission paid to a sales commission agent. The denial of Cenvat credit was based on a previous decision of the Hon'ble High Court of Gujarat, which held that such commission agents are not engaged in sales promotion activities. However, this Tribunal examined the issue in light of the definition of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994. It was observed that the High Court had considered sales promotion but not the issue of marketing or sale of goods. In a previous case, this Tribunal held that the appellant is entitled to avail Cenvat credit for commission paid to the commission agent who facilitated the sale of goods manufactured by the appellant. Additionally, a judgment by the Hon'ble High Court of Punjab & Haryana supported the admissibility of Cenvat credit on service tax paid to selling agents for the sale of goods. Given the conflicting judgments, the Tribunal decided independently, citing a previous case where it was held that in the presence of contradictory views, the Adjudicating Authority is free to take any view on the merits of the case. Consequently, the Tribunal held that the appellants are indeed entitled to avail Cenvat credit on commission paid to the selling agent for selling the goods in accordance with Rule 2(l) of the Cenvat Credit Rules, 2004.In conclusion, the impugned order was set aside, and the appeal was allowed with any consequential relief. The Miscellaneous Application was also disposed of as a result of the Tribunal's decision.