Input credit of service tax paid on commission to commssion agent for geting enquiry, participating in tender and for booking of order before start manufacturing activities

[SHAHID HASHMI]

We are engaged in the manufacture and exporting of Power Cables falling under Heading No. 8544 of the First Schedule to the Central Excise Tariff Act, 1985. We start manufacturing activities of our products only after getting Order from the domestic as well as from out side India and after approval of data sheet / specifications from clients/buyers.

We are not selling any ready made goods in the market. We paid commission to our commission agent in helping to get enquiry from clients, participating in tender and for procuring/booking sales order. All the above activities have been done by our commission agent before start of our production and there is no link with the activities of post sales.

Please advise whether Service tax paid to commission agent on above activities fall under the definition of input service as laid down in the Rule 2(1) of CENVAT credit Rule 2004, and can we avail input credit of service tax paid on the commission to commission agent. Whether the decision of Hob’ble High Court of Gujarat in the case of CCE, Ahmadabd-II v. M/s. Cadila Healrth Care will be applicable in our case.

AI Summary

Power Cable Manufacturer Ineligible for Input Credit on Service Tax Paid to Agent Under Rule 2(1) CENVAT Credit Rules 2004. A company involved in manufacturing and exporting power cables seeks advice on whether they can claim input credit for service tax paid to a commission agent. The agent assists in obtaining client inquiries, participating in tenders, and securing sales orders before production begins. The company queries if these activities qualify as input services under Rule 2(1) of the CENVAT Credit Rules 2004 and if a specific court decision applies to their situation. The response indicates that due to changes in the definition, credit is not eligible for services used prior to the commencement of manufacturing activities.