TMI Blog2014 (1) TMI 1662X X X X Extracts X X X X X X X X Extracts X X X X ..... the company but to find new customers as well. They also stated that the appellant could take the best advantage of their network available throughout the country to sell their bulk products viz., Liquid Gases on commission basis. They also gave details of Registration, Income Tax, Sales tax, Service Tax, Balance Sheet etc. This would show that even though the invoice which speaks particularly sales commission, taking note of the letter of the agent that they would help in selling the products, in canvassing business and make their network available for expanding the business, in my opinion this is nothing but sales promotion. In respect of another agent namely SPS Metal Cast & Alloys Ltd., the appellant could not show any letter or agreement. - in respect of both the agents, the appellants have been able to show that the agents not only act as commission agents but also undertake sales promotion. Therefore I consider that appellants have made out a case on merits in respect of the eligibility for CENVAT credit. - Decided in favour of assessee. - E/469/2007, E/180 & 670-672/2009 and E/432-433 & 435/2011-SM - Final Order Nos. 20176-20183/2014- - Dated:- 31-1-2014 - Shri B.S.V. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue under consideration was the eligibility of service tax paid by the assessee in the capacity of receiver since agents were located abroad. However in respect of domestic agents, the Tribunal had considered the issue in the case of CCE, Surat-II v. Astik Dyestuff Pvt. Ltd. [2013-TIOL-680-CESTAT-AHM. = 2013 (31) S.T.R. 459 (Tri.-Ahmd.)] and the Tribunal took the view that whether the agent is located abroad or in India, the eligibility of credit has to be determined on the basis of the actual activity undertaken by the commission agent and if the commission agent has merely acted as a commission agent, credit would be admissible. 4. The above observations would show that the issue to be considered in this case is whether the decisions of the Hon ble High Court of Gujarat and the Tribunal discussed above are applicable to the facts of this case and whether the agents of the appellants have acted merely as commission agents or they have also indulged in sales promotion or provided sales promotion service to the appellants. 5. Before proceeding to examine the fact, it would be appropriate to consider the learned AR s submission as regards what exactly constitutes sales promoti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in favour of the respondent had come to the conclusion that the activities in respect of which cenvat had been filed, were pre-removal activities and the same could not be held to be post-removal. It was further observed that canvassing and procuring orders were in relation to sales promotion and would fall under sales promotion activities. These activities were, thus, included in the definition of input services and the assessee was entitled to benefit of cenvat credit of service tax. It would be advantageous to notice here the findings recorded by the Tribunal in para 6 of its order which are to the following effect : I have carefully considered the submissions from both sides. The canvassing and procuring orders are activities preceding removal of the goods by the manufacturers. Without the firm order, the respondents were not expected to remove the goods to a foreign destination. Therefore, the submission of the learned DR that these activities are post-removal activities cannot be accepted. Further, the definition of the input services includes services used in relation to sales promotion and these activities can rightly be described as sales promotion activities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny evidence, Hon ble High Court had taken a view that if the commission agent had acted merely as a commission agent, in view of the definition of the input service , credit would not be available. 6. Learned CA also relied upon the decision of this Tribunal in the case of Novozymes South Asia Pvt. Ltd. - Final Order No. 27076/2013 in Appeal No. E/27918/2013 to submit that in that case the Tribunal had considered the decisions in the case of Cadila Healthcare Ltd. and also Astik Dyestuff (P) Ltd. and Ambika Overseas and came to the conclusion that where there is evidence available about sales promotion activities, credit could be admissible. He relied upon paragraph 3 of the decision which is reproduced for better appreciation. The learned counsel submitted that, the first issue is whether the stand taken by the Revenue that there is no nexus is correct or not. The first submission by the learned counsel was that the Commissioner has not at all gone into this aspect and has indicated that he need not go into the merits in view of the fact that the document on the basis of which credit was taken was defective and therefore credit itself was totally inadmissible. Unfortunatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of sales promotion. The learned counsel for the appellants drew my attention to the contract. The relevant portions of the contract are reproduced below : 2.1. The agent shall at all times during the term of this agreement uses his best efforts to solicit customers situated in the Territory 2.4 The agent shall be responsible for all general marketing necessary to diligently promote products in the Territory 3.1 The agent shall independently and continually promote sales and collect orders for products from customers in the Territory on behalf of Novozymes. 7. Now the question to be considered is whether in this case the agents have undertaken sales promotion activity or not. If the answer is yes, the credit would be admissible and otherwise no. The learned CA relied upon the letter written by one of the two agents namely Agnes Bruno Ltd. dated February 15th 2007. In this letter, Agnes Bruno Ltd. had informed the appellant that they lend a helping hand to the Business Houses to sell their products. They undertake canvassing of business not only to retain the existing clientele of the company but to find new customers as well. They also stated that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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