TaxTMI 
TaxTMI 
2025 (6) TMI 1959
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....ds during the period from 01.04.2011 to 31.12.2014. The appellant has availed such credit on the basis of invoices raised by their marketing agents namely M/s. Industrial Chemicals Agency and M/s. Trimurti Galaxy Enterprises P. Ltd. The department was of the view that as per the definition of input services as defined in Rule 2(l) of CCR, 2004 read with the definition of "place of removal" as defined in Section 4(3)(c) of Central Excise Act, 1944, the services which are enumerated in the inclusive clause of definition of input service are also required to have been used up to "place of removal". That to say, only the taxable services used by the manufacturer in relation to the manufacture of final product and clearance of the final product up to the place of removal would be eligible as input services. 3. The Department was therefore of the opinion that the commission expenses on the domestic sales were not relating to manufacturing activity undertaken by the appellant, but was related to sales activities after manufacturing and further that the said services have been availed after the goods had been cleared from the place of removal. It was also the view of the department....
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....ied upon the decision in CCE Ahmedabad vs. Cadila Healthcare Ltd reported in 2013 (30) STR 3 and has denied the benefit of cenvat credit to the appellant. That the above said decision the Hon'ble Gujarat High Court has not considered the circular of the CBEC No.943/4/2011-CX dated 29.04.2011. The Ld. Counsel would submit that the said circular has clarified that cenvat credit is available for the commission paid to commission agents. It is also contended that the Hon'ble Gujarat High Court in the above said decision has disagreed with the view taken by the Hon'ble Punjab and Harayana High Court in the case of CCE vs. Ambika Overseas reported in 2012(278) LT 524. That on account of the confusion between the above said decisions of the Hon'ble High Courts the CBEC has come up with an explanation after the sub-clause (c) of clause (i) to Rule 2 of CCR, 2004 which stated that for the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis. That the said explanation brought in by notification No.02/2016-CE(NT) dated 03.02.2016 clarificatory/retrospective and has in fact only endorsed the circular dated 29.04.2011 which grants c....
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....lant and M/s. Industrial Chemicals Agency, produced, it is seen from clause 4 that the marketing agent is tasked with procuring orders from time to time for the products of the company and the company shall make available the said product to the marketing agent/customer subject to availability and standard terms and conditions of sale for the time being in force. The marketing agent is required to communicate a monthly sales plan by 28th of every month relating to the next month and adhere to the performance of the same. Clause 6 stipulates that the marketing agent shall coordinate with end use industries as identified by them from time to time in their territory to procure orders, extend customer service and arrange dispatch of the material besides recovery of payments. Clause 8 categorically requires the marketing agent to use their endeavor to promote the sale of the said products. Clause 9 requires the marketing agent to display appropriate advertisement or hoardings in a prominent position and shall also display the correct and up-to-date price list at such places in their warehouse/godown. Thus, from the terms of the agreement it is evident that the activities undertaken....
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.... definition, it is evident that advertisement or sales promotion service has been specifically included in the scope of input service as defined in Rule 2(l) of the CCR. That apart, we also notice that the Central Board of Excise and Customs, vide Circular No.943/4/2011-CX dated 29-04-2011, on the subject of clarification on issues relating to Cenvat Credit Rules, 2004, has at sl.no.5 of the clarifications presented in tabular format, in response to the issue stated as "Is the credit of Business Auxiliary Service (BAS) on account of sales commission now disallowed after the deletion of expression "activities related to business"?", given the clarification that "The definition of input services allows all credit on services used for clearance of final products upto the place of removal. Moreover activity of sale promotion is specifically allowed and on many occasions the remuneration for same is linked to actual sale. Reading the provisions harmoniously it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis." 13. Thus, it is evident that the contemporaneous exposition of the Department, through its circular, has clearly clarif....
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....e deem it appropriate to reproduce relevant portions of the decision in Principal Commissioner of CE, Kolkata -IV Vs M/s. Himadri Speciality Chemical Ltd - 2022 (9) TMI 1213 (CAL HC) : 2022 (66) G.S.T.L. 264 (Cal.) as under: "9. As pointed out earlier, the basis for issuance of the show cause notice was the decision in the case of Cadila Health Care Limited. The said assessee was engaged in the manufacture of medicaments and had availed CENVAT Credit on service tax paid on the technical and analysis service, commission paid to the foreign agents, courier service etc. The revenue took a stand that CENVAT Credit of service tax paid on the above services is not admissible. Challenging the findings of the adjudicating authority, appeal was filed before the tribunal. Ultimately the matter travelled to the High Court. The High Court held that in the absence of any material on record, there is nothing to indicate that commission agent were involved in the activities of sales promotion and that the claim of the assessee was accordingly rejected. Thus, the Court took note of the factual position in the case that there was nothing to indicate that the commission agents were inv....
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....n delivered. It was noted that the judgment of Hon'ble High Court of Gujarat was in a very specific set of circumstance where the sales commission agent seemed to be only trading in the goods i.e. buying and selling the goods without undertaking any sales promotion or advertising. In the said judgment, Hon'ble Court noted that "there is nothing to indicate that such commission agents were actually involved in any sales promotion activities as envisaged under the said expression. Obviously, commission paid to the various agents would not be covered in this expression since it cannot be stated to be a service used directly or indirectly in or in relation to the manufacture of final products or clearance of final products from the place of removal". Board Circular No. 943/4/2011- CX., dated 29.04.2011 at point no. 5 on the other hand has explained the situation where the commission agent renders the service of sales promotion in following words".........Moreover the activity of sale promotion is specifically allowed and on many occasions the remuneration for same is linked to actual sale.......". Board circular directs that input service credit would be available when there is an elem....