2018 (7) TMI 168 – CESTAT NEW DELHI – TMI – CENVAT credit – input services – commission paid to the sales/commission agents – whether the commission paid to the sales/commission agents is related to promotion of any activity specified in the inclusive part of the definition of input service provided under Rule 2 (l) of the Cenvat Credit Rules, 2004? – Held that:- 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 [2016 (4) TMI 232 – CESTAT AHMEDABAD], where it was held that the explanation inserted in Rule 2 (l) of Rules 2004 by N/N. 2/2016-CX (NT) should be declaratory in nature and effective retrospectively.
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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 bas
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81/- + Edu. Cess ₹ 12,565/- + SHE Cess ₹ 6,282/-) wrongly availed by them should not be recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 readwith Section 11A (1) of the Central Excise Act, 1944 ; (ii) Interest on wrongly availed Cenvat credit should not be recovered from them under Rule 14 of the Cenvat Credit Rules, 2004, readwith Section 11AA of the Central Excise Act, 1944 and (iii) Penalty under Rule 15 (1) of the Cenvat Credit Rules, 2004 readwith Section 11AC (1) (a) of the Central Excise Act, 1944 should also not be imposed upon them. 3. The Adjudicating Authority vide order-in-original dated 28/06/2016 dropped the proceeding initiated vide show cause notice dated 17/12/2015 and held that the facts of the case clearly reflect that the sale and service representative/agents were engaged by the respondent/assessee to identify/develop/ nurture market for the respondent/assessee. Further, once the order is placed, to ensure that the same is taken to its
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quarely covered under the scope of definition of input services provided under Rule 2 (l) of the Cenvat Credit Rules, 2004. As such, the respondent/assessee was entitled to avail the credit and the same has been correctly availed. 4. I have heard learned DR for the Department and learned Advocate for the respondent/assessee and perused the record. 5. The issue involved in the instant appeal is whether the commission paid to the sales/commission agents is related to promotion of any activity specified in the inclusive part of the definition of input service provided under Rule 2 (l) of the Cenvat Credit Rules, 2004. Rule 2 (l) of Cenvat Credit Rules as well as amendment carried out in the definition of input services under Rule 2 (l) vide Notification No. 2/2016-CE (ST) dated 03/02/2016 which are necessary for the purposes of determining of the issue involved in the instant appeal are extracted as under :- Rule 2 (l) input service means any service, – (i) used by a provider of [output s
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4 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely :- 1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2016. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the CENVAT Credit Rules, 2004 (here-in-after referred to as the said rules), in rule 2, in clause (l), after sub-clause (C), the following Explanation shall be inserted, namely :- Explanation. – For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis. . 3. In the said rules, in rule 3, in sub-rule (4), after the sixth proviso, the following proviso shall be inserted, namely :- Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilised for payment of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015): . [Notification No. 2/2016-C.
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) E.L.T. 660 (Tri. – Ahmd.) in which this Tribunal has held that the explanation inserted in Rule 2 (l) of Rules 2004 by Notification No. 2/2016-CX (NT) (supra) should be declaratory in nature and effective retrospectively. The relevant paragraph of the said decision has been extracted as under :- 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 and against the assessee. In this background, legislature explained the meaning of the sales promotion by inserting Explanation in Rule 2(l) of Rules, 2004 and declared that sales promotion includes services by way of sale of dutiable goods on commission basis. In other way, Explanation to Rule 2(l) of Rules says in
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nts and the said decision in M/s Mangalam Cement Ltd. (supra) has been followed by this Tribunal further in the matter of Excise appeal No. 53650/2015 titled as M/s National Engineering Industries Ltd. vs. CCE & ST, Jaipur – I in which this Tribunal vide order dated 10/10/2017 while following its decision in the case of M/s Mangalam Cement Ltd. (supra) allowed the appeal filed by the assessee and held as under :- 4. After hearing both the parties, we note that identical issue has come up before the Tribunal in the case of M/s Mangalam Cement Ltd. vs. CCE, Udaipur. The Tribunal vide final order No. 56683-56685/2017 dated 28/08/2017 held as under :- 4. With regard to availment of Cenvat credit on the commission paid for sale promotion activities, the CBEC vide Circular No. 943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis. The said circular was endorsed by the Central Government vide No
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at this issue is concerned, the question is answered in favour of the Revenue and against the assessee. In this background, legislature explained the meaning of the sales promotion by inserting Explanation in Rule 2(l) of Rules, 2004 and declared that sales promotion includes services by way of sale of dutiable goods on commission basis. In other way, Explanation to Rule 2(l) of Rules says in clear terms that there is no bar on availment of the Cenvat credit on sales 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
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er activity of sales promotion is specifically allowed and on many occasion the remuneration for same is linked to actual sale. Reading the provisions harmoniously it is clarified that credit is admissible on the services of sales of dutiable goods on commission basis . From this clarification itself it is understood that if a commission agent is paid commission on account of sales of goods, his services are qualify to be input service and Cenvat credit of service tax paid on such service is admissible to the recipient of service. I find that the issue stand settled after the said clarification itself. Further this issue has also been clarified at point B-30 of Minutes of Tariff Conference of Central Excise held on 28-29th October 2015 circulated vide F. No. 96/85/15-CX. I dated 07/12/2015 wherein subject service has been considered as input service. Taking into consideration the circumstances under which the explanation was inserted in Rule 2 (l) of Rules 2004 and consequences of the
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