TaxTMI 
TaxTMI 
2019 (8) TMI 957
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....disposing of both the Appeals by this common order. 2. The Appellants are engaged in manufacturing of excisable goods viz. PP Tapes, PP Non-laminated Fabric, PP Woven Sacks. They entered into an agreement with M/s. Supreme Packaging and appointed them as 'Del Credere Agent' for the effective and proper guarantee of the solvency of its various customers of contractual relations and effective debt recovery, in order to safeguard the interest of the Appellants. As per the terms of the agreement, the Del Credere Agent will be solely responsible for guaranteeing the solvency of the buyers and will effectively guarantee for the value of bad doubtful debts arising out of such sales made by them and as such will guarantee to compensate the whole a....
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....e of Cenvat credit was confirmed and its recovery was ordered alongwith interest and penalty. Appellant preferred two Appeals before Commissioner (Appeals) against the aforesaid Orders-in-Original and the learned Commissioner vide common impugned order dated 5.2.2018 rejected both the Appeals filed by the Appellant. 3. The learned counsel for the Appellant submitted that the only ground on which the Cenvat credit is denied to the Appellant is that the service provided by the Del Credere Agent were utilized by the Appellants for post removal activities and therefore they are not covered within the definition of input service. He refers to the agreement dated 28.2.2014 entered into between the Appellant and Supreme Packaging i.e. the Del Cre....
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....ion from the appellants @ 1.3% on net sale proceeds. The said agents issued bills including applicable service tax in appellants name for recovering the commission. Thereafter the appellants availed Cenvat credit of the service tax amount shown in the bills issued by the said agents. Per contra learned Authorised Representative appearing on behalf of Revenue reiterated the findings recorded in the impugned order and submitted that the activities of the Del Credere Agents does not amount to sales promotion. He further submitted that since the services provided by the Del Credere Agents were utilized by the appellants for post removal activities, therefore it does not amount to sales promotion and accordingly are not covered by the definition....
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....necessity in case of any of particular buyer Companies." After reading the aforesaid clauses of the agreement it is clear that the Del Credere Agents are evaluating the prospective customers and also guarantee the collection for the dues. As per the agreement, the Del Credere Agent at its own cost and expenses appoint subagents/ employees, wherever required, for the business of the Appellant and for canvassing upto date information of the existing and anticipated buyers with whom the Appellant has dealt or intend to deal. The agreements further provides that the Del Credere Agent will be solely responsible for guaranteeing the solvency of the buyers and will effectively guarantee for the value of bad doubtful debts arising out of such sal....
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....foresaid activity falls under Business Auxiliary Service. A reading of the agreement between Appellant and Del Credere Agent would establish that it is related to the sales promotion. Only because some clause of the agreement mentioned that they won't provide any guarantee where the recoveries are held up due to poor quality or quantity of the product supplied by them, does not take it outside the purview of Business Auxiliary Service and in view of that it cannot be said that the services of the Del Credere Agents were exclusively utilized by the appellants for post removal activities only. If that is the situation then it can very well said to be the input service as per Rule 2(l) ibid. As per clause 2 of the Agreement the Del Credere Age....