AI Drafter 
TaxTMI 
TaxTMI 
2019 (7) TMI 202
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....services, namely, service tax paid on the commissions paid to Del Credere agent on the basis of the invoices issued by their registered office as 'input service distributor' (ISD). Alleging that the commissions paid to Del Credere agents does not fall within the scope of the definition of 'input service' as prescribed under Rule 2(l) of Cenvat Credit Rules, 2004 and the input service invoices issued by ISD is not valid, show cause notice was issued to them for recovery of the said credit amount with interest and penalty. On adjudication, the learned Commissioner confirmed an amount of Rs. 78,47,108/- with equivalent penalty and interest but dropped the balance amount of demands. Revenue filed appeal against the amount dropped by the Commissioner, whereas the assessee is in appeal against confirmation of the demand with interest and penalty. 3. At the outset, the learned Advocate, Shri Vipin Jain, for the appellant supporting the impugned order, submits that the Del Credere agents were appointed by the appellant to promote the sale of the products manufactured by them. The agents were required to furnish to the appellant with details of financial soundness, reputation and goodwil....
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.... situated at Satellite office at Ahmedabad. Later, the major activities were shifted to the office at Satellite, Ahmedabad. Hence, they requested for change of address of ISD on 1st March 2006. It is his contention that the cenvat credit availed on the input invoices issued in their earlier address prior to 01.03.2006 has been wrongly denied by the Commissioner in the impugned order. It is his contention that even if the office is not registered as an ISD, still cenvat credit has been held to be admissible by the Hon'ble Gujarat High Court in the case of CCE vs. Dashion Ltd. - 2016-TIOL-111-HC-AHM-ST. Further, the principle laid down in the said judgment has been accepted by the Board vide Circular No.1063/2/2018-CX dated 16.02.2018. Therefore, cenvat credit for the period prior to 01.03.2006 availed on the input invoices is admissible. 7. Per contra, learned AR for the Revenue reiterates the grounds of appeal. He has submitted that the learned Commissioner has failed to appreciate that the agents appointed by the assessee, M/s. Reliance Industries Ltd. had undertaken to collect the sale proceeds from the customers. In the event the customer failed to pay the consideration amoun....
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.... the customers direct on the orders placed by the Agent and/or the customers and the price realized and shall furnish a statement of such account of sales at the end of each month to IPCL. 8. In the event the customer(s) commit default in payment of price for the Product(s) sold on the due date(s), IPCL shall be entitled to recover such defaulted amount(s) together with interest at such rate(s) as may be decided by IPCL from time to time during the period the default continues from the Agent and from the securities provided or which may at any time hereafter be provided by the Agent or from any other moneys due or which may at any time become due from IPCL to the Agent, whether singly or jointly with another, or other. The Agent shall indemnify absolutely, unconditionally and fully and at all times keep indemnified IPCL against any loss or damage caused to or suffered by IPCL by reason of non-payment of the price of the Product(s) supplied to any customer or by reason of breach by the Agent of any of the terms or conditions of this Agreement or by reason of the Agent's failure to perform this Agreement. 10. The Agent agrees and undertakes to submit to IPCL monthly....
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....agent assumes the position of a surety who is liable to his principal if the vendee make default. Such agents are commonly referred to in English law. They are also known as del credere factor." 13. A plain reading of the scope of commission agent and the Del Credere Agent, it can be inferred that the Del Credere Agent is the one who guarantees payment from the customer's for the sale and in the event of default in such payment, makes good of the same to the prinipal. In the present case, besides, the activity of sales promotion, the agents have also undertaken to act as a Del Credere Agent. Therefore, merely because of the fact they were also act as Del Credere Agent, the activities/services provided by such agents in promotion of the sale of the product cannot in any manner be diluted. Therefore, in our opinion, the activities/services rendered by the agents through the agency agreement reproduced above clearly indicate that the services provided by them are in the nature of sales promotion activities in addition to the service as Del Credere Agent, hence, fall within the scope of definition of 'input service' as prescribed under Rule 2(l) of the Cenvat Credit Rules, 2004. ....
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....es promotion, accordingly, eligible to cenvat credit. 15. Regarding the second issue of eligibility of cenvat credit of Rs. 78,47,108/- denied by the learned Commissioner, the contention of the appellant is that they had initially obtained registration of their office premises at Shantikunj, Opp. Government Polytechnic, Ahmedabad as an ISD as on 10th August 2005 for the purpose of input Service Distributor(ISD). At the relevant time, their Satellite office was a unit included in the list of units for distribution of credit submitted to the department. However, later, due to shifting of the business operations to Satellite office, change of address in the ISD Registration Certificate was requested and allowed from 1st March 2006. The learned Commissioner has denied the credit on the input invoices issued prior to 01.03.2006. We do not find substance in the observation of the learned Commissioner in denying credit on such input invoices, in view of the principle of law laid down by the Hon'ble Gujarat High Court in the case of Dashion Ltd. (supra). Their Lordships analyzing the issue observed that for non- registration as an ISD, credit cannot be denied. Their Lordships observed a....