2020 (11) TMI 893

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.... Appeal Nos. E/663/2012   E/1139/2012   E/20907/2017   E/20909/2017 Period Involved Dec. 2006 to April  2010 April 2008 to April  2010 May, 2010 to July,  2011   August,  2011 to March 2012   April, 2012 to Dec. 2012 Date of Issuance of Show Cause Notice 07.02.2011   25.10.2011   11.07.2012   12.02.2013   Cenvat credit demand Rs. 1,35,15,241/- Rs. 2,98,262/- Rs. 56,49,735/- Rs. 35,85,570/- Rs. 40,46,760/- Penalty Imposed Rs. 1,35,15,241/- Rs. 2,98,262/- Rs. 56,49,735/- - OIO No. & date   31/2011 dated 20.12.2011   4/2012 dated 30.01.2012 41 & 42/2020 (R) dated 06.11.2013 OIA Nos. & date       189-190/2017 dated 03.04.2017 2. For the sake of convenience, the facts of appeal No. E/663/2012 are taken. 2.1 Appellants are engaged in the manufacture of P....

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....tion to the products, notifying the customers / prospective customers of all the terms and conditions of sale as determined by the appellant and while the appellant undertake the sale of the product. She further submitted that the term 'input service' as defined under Rule 2(l) of CENVAT Credit Rules, 2004 explicitly includes the activity of 'sales promotion'. Further, the explanation of Rule 2(l) of CENVAT Credit Rules, 2004 inserted by Notification No.2/2016-CE (NT) dated 3.2.2016 holding that sales promotion includes services by way of sale of dutiable goods on commission basis. She further submitted that this amendment is declaratory in nature and hence is effected retrospectively. For this submission, she relied upon the following decisions. • Essar Steels India Ltd. vs. CCE & ST, Surat - 2016 (335) E.L.T. 660 (Tri. - Ahmd.) • Stanley Seating vs. CCE, Bangalore-III - 2017 (3) G.S.T.L. 137 (Tri. - Bang.) • Simboli Sugar Ltd. vs. CCE, Meerut - 2018 (363) E.L.T. 1172 (Tri. - All.) • Beloorbayir Biotech Limited vs. CCT, Bangalore - 2018-VIL-370- CESTAT-BLR-ST 4.1 It is her further submissions that relying upon these cited deci....

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....o the appellants to demand CENVAT credit availed during the period December 2006 to April 2010 and May 2010 to July 2011 respectively. Hence, on application of the normal period of limitation of one year, the demand for the period December 2006 to January 2010 and May 2010 to September 2010 is respectively barred by limitation. Further, the appellant submit that they have not suppressed any facts from the department, much less acted with an intent to evade payment of duty and hence, longer period of limitation in terms of Section 11A cannot be invoked in the present case because the appellants have been regularly filing ER-1 returns disclosing the availment of credit and it is not the case of the department that the appellant has not disclosed the credit availment in their books of accounts or in their returns. Further, the fact of availment of credit of service tax paid on the sales commission paid to FMGIL was known to the department during the CERA audit conducted for the period January 2008 to April 2010. She also submitted that it is a settled law that when the demand is based on audit objection, the extended period is not invokable and also that suppression cannot be alleged ....

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....ing paid to FMGIL is solely based on and is directly connected to sale of goods and is 5% of the net price of the goods sold in the market. Hence, appellant is paying commission to FMGIL for sales only. She also submitted that payments made to M/s. FMGIL are towards agency services associated with marketing of goods and the activities of the sole selling commission agent are post manufacturing activities and are services received in relation to duty paid on goods beyond the place of removal and hence, credit is not admissible. 6. After considering the submissions of both the parties and perusal of the material on record, we find that the only issue involved in the present appeals is viz., denial of CENVAT credit availed on sales commission paid to sister concern M/s. FMGIL for promoting sales and denial of CENVAT credit on service tax paid on outward transportation from factory to buyer's premises during the period from April 2008 to April 2010. Before, we proceed to decide the question involved, it is pertinent to quote the relevant provisions of CENVAT Credit Rules, 2004 pertaining to input services. The definition of input service as contained in Rule 2(l) is reproduced herei....

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.... dated 7.2.2015 has clarified that decision in the case of Cadila Healthcare Ltd. cited supra applies in case where the agent is undertaking only sales and no sales promotion. Whereas in the present case, it is clearly evident from various terms and conditions contained in clause (3) of the Agreement that M/s. FMGIL undertakes the activity of sales promotion. Hence, we hold that the decision in the case of Cadila Healthcare Ltd. is not applicable in the present case. This issue is no more res integra and has been settled in favour of the assessee in various decisions cited supra wherein it has been consistently held that sales commission fall under definition of 'input service'. By following the ratio of the above said decisions, we hold that denial of CENVAT Credit on sales commission is not sustainable in law. 7. Coming to the denial of CENVAT credit on outward transportation from factory to the customers' premises, learned counsel for the appellant admitted that on merit, the decision of the apex court in the case of CCE vs. Ultra Tech Cement Ltd.: 2018 (9) GSTL 337 (SC) is against the appellant and therefore, she did not argue on merits but submitted that substantial demand ....