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2022 (4) TMI 561 - CESTAT KOLKATACENVAT Credit - input service - sales commission - denial on account of nexus - HELD THAT:- The sales commission is directly attributable to sales of the products. Any activity which amounts to sale of the products is deemed to be sales promotion activity in the normal trade parlance. The commission paid on sales of the products/services with an intention to boost of the Company. The commission paid on sales becomes part of sales promotion resulting in increased manufacturing activity. The sales commission has a direct nexus with the sales, which in turn is related to the manufacture of the products. If there is no sale, there would not be any need to manufacture the products. Be that so as it may, to increase the manufacturing activity an encouragement is being given by way of sales commission for achieving increased sales. Hon’ble High Court of Punjab & Haryana in the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA VERSUS AMBIKA OVERSEAS [2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT], had clearly held that the sale and manufacture are directed inter-related and the commission paid on sales needs to be accounted for as services related to sales promotion. Division Bench of this Tribunal in the case of M/S ESSAR STEEL INDIA LTD. VERSUS COMMISSIONER OF C. EX. & SERVICE TAX, SURAT-I [2016 (4) TMI 232 - CESTAT AHMEDABAD], wherein the Tribunal, after discussing all the previous cases and Rules of interpretation, have held that the “Explanation” inserted in Rule 2 (l) of Cenvat Credit Rules, 2004 vide Notification No.2/2016-CE (N.T.) dated 03.02.2016 is declaratory in nature and is applicable retrospectively. The impugned order cannot be sustained and is, therefore, set aside - Appeal allowed - decided in favor of appellant.
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