TMI Blog2014 (11) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... activities - in the case in hand, the activities of M/s JAS Marketing as indicated in the show cause notice, clearly exhibit that it is the selling agent acting on behalf of the respondent. - Credit not allowed. - Decided partly in favour of Revenue. - ST/106/2008-SM - Final Order No. 21955/2014 - Dated:- 3-11-2014 - SHRI S.K. MOHANTY, J. For the Appellant : Shri N. Jagdish, Superintendent(AR) For the Respondent : Shri B. Venugopal, Advocate JUDGEMENT Per : S.K. MOHANTY; The Revenue is in appeal against the Order-in-Appeal No.25/2007(T) ST dated 24/10/2007 passed by the Commissioner (Appeals), Customs Central Excise, Guntur. Vide the said impugned order, the order dated 31/03/2007 passed by the adjudicating authority has been set aside on the ground that service tax paid on C F agents commission by the respondent herein, is in relation to storage of goods up to the place of removal and such tax is added to the cost of production for the purpose of determination of value for assessment. With regard to the commission paid to M/s. JAS Marketing Pvt. Ltd., Mumbai, the impugned order has held that to promote the sale of goods, the respondent company has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument that service tax paid on the commission amount will be eligible as input service, the learned Advocate has relied on the judgment of Hon'ble Bombay High Court, delivered in the case of Commissioner of Central Excise, Nagpur - Vs. - Ultratech Cement Ltd. [2010 (260) ELT 369 (Bom.)] and Coca Cola India Pvt. Ltd. - Vs. - Commissioner of Central Excise, Pune - III [2009 (242) ELT 168 (Bom.)]. The learned Advocate also cited the final order Nos. 20176-20183/2014 passed by this bench of the Tribunal to support his above stand. 5. I have heard the learned counsel for the parties and perused the records. 6. It is an admitted fact on record that the C F agent had maintained the depot operations, wherein the chocolates manufactured by the respondents had been stored for onward delivery to the dealers upon raising the invoices. The question as to whether such services will qualify as 'input service' in terms of the definition contained in Rule 2(l) of the CCR, the answer is in affirmative. Because, the definition of 'input service' takes within its ambit clearance of final products from the place of removal for availing Cenvat credit. Though the phrase &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o fall in the category of C F agent, is that the relationship between the service provider and receiver should be in the nature of principal (owner) and agent. The C F Agent carries out all activities in respect of goods right from the stage of their clearances from the premises of the principal to its storage and delivery to the customers. (v) At this stage reference may be made to the definition of the expression place of removal as defined under clause (c) of sub-section (3) of Section 4 of the Act which reads thus : (c) place of removal means - (i) a factory or any other place or premises of production or manufacture of excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed. (vi) Thus, the clearing and forwarding agent is an agent of the principal. The goods stored by him after clearance from the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem. The said service tax paid on such commission is taken as CENVAT credit by the company in their registers and utilizing the same for payment of Central Excise duty on finished goods. 11. The activities of the commission agent as indicated above clearly demonstrate that such agent is concerned with the sale of respondent' goods to the defence canteen only, which cannot be considered as sales promotion, for the reason that in case of sales promotion, strategy is required to be adopted to motivate a large number of customers to expand the business base, which is absent in the present case. Thus, in my opinion, service tax paid on the commission amount of M/s JAS Marketing, which is in relation to selling of goods to the individual customer, will not fall within the purview of definition of 'input service' for taking Cenvat credit by the respondent. The activity which constitutes 'sales promotion' in commercial parlance has been elaborately dealt with by the Hon'ble Gujarat High court in the case of Cadila Healthcare Ltd. (supra), relied on by the appellant. The relevant paragraphs 5.2(vii) to (ix) of the said judgment are reproduced as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for sale of final product. However, there is nothing to indicate that such commission agents were actually involved in any sales promotion activities as envisaged under the said expression. The term input service as defined in the rules means any service used by a provider of taxable service for providing an output service or used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal and includes services used in relation to various activities of the description provided therein including advertisement or sales promotion. Thus, the portion of the definition of input service insofar as the same is relevant for the present purpose refers to any service used by the manufacturer directly or indirectly in relation to the manufacture of final products and clearance of final products from the place of removal. Obviously, commission paid to the various agents would not be covered in this expression since it cannot be stated to be a service used directly or indirectly in or in relation to the manufacture of final products or clearance of final products from the place of removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing and training, computer networking, credit rating, share registry, and security. Thus, what is required to be examined is as to whether the service rendered by commission agents can be said to be an activity which is analogous to any of the said activities. The activity of commission agent, therefore, should bear some similarity to the illustrative activities. In the opinion of this court, none of the illustrative activities, viz., accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security is in any manner similar to the services rendered by commission agents nor are the same in any manner related to such services. Under the circumstances, though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agents not being analogous to the activities mentioned in the definition, would not fall within the ambit of the expression activities relating to business. Consequently, CENVAT credit would not be admissible in respect of the commission paid to foreign agents. 12. The judgment of Hon'ble Bombay High Court in the case of Ultra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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