Whether service tax credit on commission paid to agents is admissible?

PJ/Case Law/2013-14/1659

Case:- VISHAL PIPES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA

Citation:- 2013(293) E.L.T. 386(Tri.-Del.)

Brief Facts:-The Appellants are manufacturers of steel tubes and pipes, structural pipes and rigid PVC pipes and they have been taking Cenvat credit of input services used by them for sale of such product. That is to say, they were engaging commission agents on which service tax has been paid. They were taking credit of such service tax paid on services rendered by commission agent. Revenue made out a case that services of commission agent is not an input service within the meaning of the expression as defined under Section 2(l) of Cenvat Credit Rules, 2004. Base on such reasoning, Revenue issued two Show Cause Notices for the period March 2010 to Sept.2010 and October 2010 to March 2011 and later confirmed duty demand of Rs. 1,83,949/- and Rs. 2,21,570/- respectively for the said periods by disallowing such Cenvat credit.

Appellant’s contention:- The appellant submitted that this issue is already decided by the Tribunal in their favour vide Final Order No. 292/012-SM(BR) in Appeal No. E/2243/2011-SM in their own case and therefore the appeal may be heard without pre-deposit of due and the same may be allowed following the precedent decision.

Respondent’s contention:-The ld. AR is not able to make out any difference between the facts of the case which is already decided and present facts of the case.

Reasoning of Judgment:- We have considered the submission from both the parties and perused the record, we find that services used for “sale promotion” is specifically included in the definition of input service as defined under Rule 2(l) of Cenvat Credit Rules, 2004. Therefore, there is no merit in case made out by Revenue. Therefore after waiving the requirement of pre-deposit of dues for admission of appeal the appeal itself is taken up for disposal and the same is allowed following the precedent decision in favour of the appellant in their own case.

Both stay petition and appeals are disposed for accordingly and appeal is allowed in favour of appellant.

Decision:-Appeal allowed.

Comment:-The essence of this case is that Cenvat credit taken on service tax paid in relation to commission agent’s service used by them for sale of their product is admissible as it is specifically included in the definition of input service as defined under Rule 2(l) of Cenvat Credit Rules, 2004. However, there has been a recent decision of High Court in the case of Cadila Healthcare wherein such credit has been disallowed.

Comments

PJ/Case Law/2013-14/1659

Post a Comment

Query