CGST, C & CE, Alwar Versus M/s Krishi Icon
Service Tax
2018 (7) TMI 97 – CESTAT NEW DELHI – TMI
CESTAT NEW DELHI – AT
Dated:- 2-7-2018
Service Tax Appeal No. 51179 of 2018 (SM) – Final Order No. 52380/2018
Service Tax
Hon'ble Shri Ajay Sharma, Member ( Judicial )
Shri K. Poddar, Authorized Representative ( DR ) – for the appellant
Shri Mohit Gohlyan, C.A. – for the respondent
ORDER
Per. Ajay Sharma
The instant appeal has been filed from the order-in-appeal dated 16/01/2018.
2. The respondent/assessee is engaged in providing the “construction of residential complex services, real estate agent services and business support services”. During the course of audit of records of the respondent/assessee it was observed that the assessee had availed Cenvat credit of service tax paid on “commission/brokerage on sale of flats” amounting to Rs. 40,56,453/- during the period from July 2013 to September 2015. Accordingly, a show cause notice was issued to the respondent/as
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l) of Cenvat Credit Rules, 2004.
4. The amount of recovery of Rs. 40,56,453/- alongwith interest and penalty was confirmed by the Adjudicating Authority vide order-in-original dated 29/06/2016. Aggrieved the respondent/assessee filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) vide impugned order dated 16/01/2018 allowed the appeal filed by the respondent/ assessee and held as under :-
“10. In view of above discussion and in the light of the clarification dated 24/09/2011 and notification dated 03/02/2016, I can safely conclude that the activity of commission agent for selling the products of the appellants is squarely covered under the scope of definition of input service provided under Rule 2 (l) of the Cenvat Credit Rules, 2004, as such the appellants were entitled to avail the subject credit and the same has been correctly availed. I therefore, find it proper to set aside the impugned orders disallowing the credit and ordering for recovery of the same al
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nal products and clearance of final products upto the place of removal,
and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal”;
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“Cenvat Credit Rules, 2004 – Second Amendment of 2016
In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend th
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serted in the Rule 2 (i) vide notification dated 03/02/2016 shall be effective only from the date of publication in the official gazette i.e. shall have only prospective application and that the learned Commissioner (Appeals) has erred in applying the said explanation retrospectively. He further submitted that there is no nexus between the sales/commission agent activities and the manufacturing activities and that manufacturing can be undertaking without availing the services of sales/commission agent.
8. The learned Consultant appearing for the respondent/ assessee on the other hand supported the impugned order passed by the learned Commissioner (Appeals).
9. Whether the explanation added in Rule 2 (l) of Cenvat Credit Rules, 2004 vide notification dated 03/02/2016 has retrospective effect or not, has come before this Tribunal in the matter of Essar Steel India Ltd. vs. CCE & ST, Surat – I reported in 2016 (335) E.L.T. 660 (Tri. – Ahmd.) in which this Tribunal has held that the expl
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s promotion service by way of sale of dutiable goods on commission basis. Further, by inserting the Explanation in the Rule 2(l), it has confirmed the Board Circular and resolved the different views of the High Courts. Taking into circumstances under which the Explanation was inserted in Rule 2(l) of Rules, 2004 and consequence of the Explanation to extend the benefit to the assessee as per Board Circular, we hold that the Explanation inserted in Rule 2(l) of Rules, 2004 by Notification No. 2/2016-CX (N.T.) (supra) should be declaratory in nature and effective retrospectively”.
10. The said decision of Essar Steel India Ltd. (supra) has been further followed by this Tribunal in a batch of matter titled as M/s Mangalam Cement Ltd. vs. CCE, Udaipur vide final order No. 56683-56685/2017 dated 28/08/2017, in which this Tribunal following its decision in Essar Steel Ltd. (supra) allowed the appeals filed by the appellants and the said decision in M/s Mangalam Cement Ltd. (supra) has been f
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Healthcare Ltd. (supra), the Hon'ble Gujarat High Court had not referred to the Circular dated 29/04/2011 and also there were divergent views by the Hon'ble Punjab & Haryana High Court in the case of CCE, Ludhiana vs. Ambika Overseas – 2012 (25) S.T.R. 348 (P&H). Considering the conflict in judgments of different High Courts and also the notification dated 03/02/2016, this Tribunal in the case of Essar Steel India Ltd. (supra) has held that the said notification should be considered as declaratory in nature and effective retrospectively. The relevant paragraph in the said decision is extracted herein below :-
“20. But, the Hon'ble Gujarat High Court in the case of Cadila Healthcare Ltd. (supra) was unable to concur with the contrary view taken by the Hon'ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Ludhiana v. Ambika Overseas (supra). The Hon'ble Gujarat High Court held that this issue is concerned, the question is answered in favour of the Revenue a
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e settled position and law, we do not find any merits in the impugned orders. Accordingly, after setting aside the same, we allow the appeals in favour of the appellants”.
11. Thereafter again this issue came up before this Tribunal in a batch of matters in which this Tribunal vide final order Nos. 51412-51426 of 2018 dated 16/04/2018 while following its decision in the matter of National Engineering Industries Ltd. (supra) dismissed the appeal filed by the Revenue.
12. Explanation to Rule 2 (l) of Rules 2004 says it in clear terms that there is no bar on availment of Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis. During the period from 2008 onwards this issue has been considered by various appellate authorities and the Board has also issued clarification vide Circular dated 29/04/2011 specifically under point No. 5 which contains the wording that “… Moreover activity of sales promotion is specifically allowed and on many occasion the
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