https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769371 https://www.taxtmi.com/caselaws?id=769371 Availment of input service credit on outward freight from factory to sales outlets - Input Credit availed by the Appellant on sales commission paid to the franchisee for marketing and selling the products manufactured by the appellants is allowable or not - eligibility to avail input service credit on service tax on rent paid for the Retail outlets. Whether the assessee is eligible to avail input service credit on outward freight from factory to sales outlets? - HELD THAT:- The rent for the franchisee showroom is borne by the Appellant and sales tax in respect of the goods stock transferred to the outlet is suffered by the Appellant as per Clause 7 of the Franchisee agreement. Further we find that as per clause 9 of the said agreement, the appellant bears the cost of transportation of stock transferred to the franchisee outlet and for the unsold stock transferred back to the Appellant by the Franchisee. Besides, as per Clause 10 of the agreement, the insurance coverage for showroom stock is taken by the Appellant. It is also found that the definition of 'place of removal' contained in Section 4(3)(c) of Central Excise Act, 1944 includes the premises of a consignment agent or any other place from where the excisable goods are sold. Under the above circumstances, the Franchisee showroom is the place of removal and therefore the credit availed on outward GTA services for movement of goods from the appellant's unit to Franchisee premises on stock transfer basis is eligible as it is for transportation of goods up to the place of removal. Reference made to the decision of the CESTAT New Delhi in the case of Cantabil Retail India Ltd, Rajesh Rohilla, Ani Bansal, Director Vs. Commissioner of Central Excise, Delhi-I [2017 (9) TMI 205 - CESTAT NEW DELHI] wherein it was held 'The Revenue presumed that the services should be in or in relation to manufacture of ready-made garments, whereas Rule 2(l) clearly talks about services used by manufacturers, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal. A plain reading of the said statutory provision will indicate that the presumption of the Revenue is not sustainable.' The Appellant is entitled to avail the Cenvat credit of transportation paid on goods stock transferred to the franchisee outlets. Whether the input credit availed on sales commission paid to franchisees for marketing and selling the appellant's products is allowable? - HELD THAT:- The inclusive part of the provisions of Rule 2(l) of Cenvat Credit Rules, 2004 provides for availment of Cenvat credit on sales commission paid to franchisees. The appellant had incurred expenses/paid commission to the franchisees for display of the products and effecting the sale of goods which was attributable to the promotion of sales of the said goods. The CBEC Circular No. 943/04/2011 clarified that the credit would be admissible on the services of sale of dutiable goods on commission basis. The Ld. Counsel placed reliance on the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. Versus CCE, Jodhpur [2017 (12) TMI 882 - CESTAT NEW DELHI] wherein the Tribunal relying on the above said circular had held that there was no bar on availment of Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis - the Appellant is eligible for Input Credit availed on sales commission paid to the franchisees. Whether the Appellant is eligible to avail input service credit on service tax on rent paid for the Retail outlets? - HELD THAT:- It is not disputed that the goods manufactured were transferred from the factory premises to the franchisee showroom, from where the goods were sold to eventual customers. The issue is no more res integra as there is a catena of judgements delivered by various forums which is applicable to the present appeal. The Tribunal in the case of Commissioner of C.EX., Delhi-III Vs. Mark Exhaust Systems Ltd. [2015 (9) TMI 1472 - CESTAT NEW DELHI], on a similar issue held 'Since the duty paid vehicles were removed to the depot, from where the same were sold to the customers, such activity squarely falls under the definition of "input service" under the category of "storage up to the place of removal", itemised therein. In the above referred cases, the Tribunal has allowed the services availed for the Go-down/Depot by holding that the services have nexus with the ultimate manufacturer of final product"' - Thus, the Cenvat Credit on rent paid on immovable property in respect of retail outlets is eligible for Cenvat Credit. Conclusion - i) Cenvat Credit on outward transportation upto the place of removal is allowed and the place of removal is determined to be the sales outlets (franchisees stores). ii) Cenvat Credit on Sales commission paid to the franchisees is allowed. iii) Cenvat credit availed on commercial rent paid for retail outlets/ show rooms is allowed. Appeal allowed. Case-Laws Central Excise Wed, 23 Apr 2025 00:00:00 +0530