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TMI Blog2014 (6) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant have procured sales orders for them for which they had received commission and on that commission the service tax has been paid. The department issued show cause notice for recovery of this cenvat credit on the ground that this service is not covered by the definition of 'input service' inasmuch as the same has no nexus with the manufacture of the Appellants final product. The show cause notice was adjudicated by the Asstt. Commissioner vide his order-in-original dated 14.07.2010 by which the demand of cenvat credit of Rs.4,99,483/- was confirmed along with interest and besides this, penalty under Rule 15 (2) of the Cenvat Credit Rules, 2004 was also imposed. The appeal filed to the Commissioner (Appeals) against this order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Commissioner (Appeals) and emphasized that the service of commission agent has no nexus with the manufacture of final product and that contrary view has been taken by the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Ahmedabad Vs. Cadila Healthcare Ltd. reported in 2013 (30) STR 3 (Gujarat), in para-5.2 (vii), 5.2 (viii) and 5.2 (ix) of which, it has been held that services of commission agent for procuring export orders is neither covered by the term 'sales promotion' nor by the term 'activities related to Business', in the definition of 'input service', that in this judgement, the Hon'ble High Court in para 5.2 (x) also considered the judgement of Hon'ble Punjab & Haryana High Court in the case of Ambi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the assessee and only if the activity is not integrally connected with the business of the manufacture of final product, the service would not quality to be a input service under Rule 2(1) of the 2004 Rules. He emphasized that procurement of sales orders is an integral part of the manufacturing business and hence, this has to be treated as 'input service'. 6. I have considered the submissions from both the sides and perused the records. 7. The only point of dispute in this case is as to whether the service of procuring sales orders of cement through commission agents i.e. business auxiliary services being received by them is covered by definition of 'input service' or not. On this issue, while there is a direct judgement of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring services are covered under the inclusive part of the definition of 'input service'. The services covered under the inclusive part of the definition of input service are services which are rendered prior to the commencement of manufacturing activity (such as services for setting up, modernization, renovation or repairs of a factory) as well as services rendered after the manufacture of final products (such as advertisement, sales promotion, market research, etc.) and includes services rendered in relation to business such as auditing, financing. etc. Thus, the substantive part of the definition 'input service' covers services used directly or indirectly in or in relation to the manufacture of final products, whereas the inclusive part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f manufacture of final products would not qualify as the 'input service' under Rule 2 (l). In para-28 of this judgement, Hon'ble Bombay High Court has emphasized that the definition of 'input service' is very wide and covers not only services, which are directly or indirectly used in or in relation to the manufacture of final products, but also includes various services used in relation to the 'business of manufacture of final products', be it prior to the manufacture of final products or after the manufacture of final products and that the definition of 'input service' is not restricted to the services used in or in relation to manufacture of final products. Same view has been taken by Hon'ble Bombay High Court in para 25 of its judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is specifically allowed and on many occasions, the remuneration for the same is linked to actual sale. Reading the provision harmoniously, it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis. Thus according to this circular, the service of commission agents (Business Auxiliary Service) is covered by the term 'advertisement or sales promotion'. In my view, there is nothing in this circular which is contrary to the provisions of law and hence the same would be binding on the Departmental officers. Thus, in view of this circular also, though it is in respect of definition of 'input service' during period w.e.f. 1.4.2011, commission agents service would be cenvatable as the term 'adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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