2012 (12) TMI 145 - AT - Central Excise

CENVAT Credit - Service Tax paid by him as a recipient of services from foreign national for the purpose of obtaining the orders from the foreign countries denial on the ground that the appellant is not eligible for availing credit under the provision of Rule 2(l) of CENVAT Credit Rules 2004 - period involved in this case is prior to 31.03.2008 on which day the definition under Rule 2(l) of CENVAT Credit Rules 2004 has undergone change - commission paid by the appellant is for procuring the orders for goods manufactured by him - Service Tax liability on the appellants made under Section 66A is a liability which should have been discharged by commission receiver in which case the appellant would have been eligible to avail CENVAT Credit of Service Tax so paid - activity of payment of commission during the relevant period is in respect of the business activity of appellant cenvat credit allowed in favor of assessee

Summary

Issues: Appeal against disallowance of CENVAT Credit on Service Tax paid for services from foreign national.

Analysis:
The appeal was filed against Order-in-Original No. 06/DEM/Vapi/2009, which disallowed the CENVAT Credit on Service Tax paid by the appellant for services from a foreign national to obtain orders from foreign countries. The Counsel argued that the issue was settled by various decisions, including CCE Ludhiana Vs Ambika Overseas and Bodal Chemicals Ltd Vs. CCE Ahmedabad. The Counsel highlighted that the judgment of the Hon'ble High Court of Karnataka followed by the Hon'ble High Court of Punjab & Haryana in Ambika Overseas case was relevant, especially considering the period before 31.03.2008.

Upon reviewing submissions and records, it was found that the adjudicating authority disallowed the CENVAT Credit based on the appellant's ineligibility under Rule 2(l) of CENVAT Credit Rules, 2004. However, it was noted that the commission paid to overseas persons was for procuring orders for goods manufactured by the appellant. The Service Tax liability under Section 66A should have been discharged by the commission receiver, making the appellant eligible for CENVAT Credit. The activity of paying commission during the relevant period was deemed part of the appellant's business activity.

The Tribunal concluded that the issue was squarely covered by the judgments of the Hon'ble High Court of Karnataka in the case of ABB Ltd. and the Hon'ble High Court of Punjab & Haryana in the case of Ambika Overseas. Therefore, the impugned order disallowing the CENVAT Credit was set aside, and the appeal was allowed.