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2015 (9) TMI 575 - CESTAT MUMBAI

2015 (9) TMI 575 - CESTAT MUMBAI - TMI - Cenvat Credit - Input services - Business auxiliary services being provided by the commission agents - Nexus with manufacturing activity - impact of the amendment to Rule 2(l) w.e.f. 1.4.2011 - The demands raised were confirmed by the Commissioner by distinguishing between the activity of "Sales Promotion" and "Sales" - Held that:- the decisions of this Tribunal in the case of Rosa Sugar Works vs. CCE, Lucknow [2013 (11) TMI 1074 - CESTAT NEW DELHI] is cl .....

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11, commission agents service would be cenvatable as the term "advertisement and sales promotion" was there in the definition of input service even during period prior to 1-4-2011. - Appeal No. E/88903/13 - Dated:- 21-7-2015 - Anil Choudhary, Member (J) And Raju, Member (T), JJ. For the Appellant : Shri M H Patil, Adv For the Respondent : Shri Ajay Kumar, Jt Comm (AR) ORDER Per : Raju 1. This appeal is directed against Order-in-Original No.23/MAK(23)/COMMR/RGD/13-14 dated 28/06/2014 passed by Co .....

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s. The show-cause notice relies on the decision, of this Tribunal in the case of Vikram Ispat vs. CCE Raigad, - vide order No. A/227-230/09/SMB/C-IV dated 01/06/2009 (passed in Appeal Nos. ST/241 to 244/08), wherein it is held that: "Any service to be brought within the ambit of definition of "input service" should be one which should specify the essential requirement contained in the main part of the definition. This requirement is equally applicable to the various items mentione .....

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sed. 3. The demands raised were confirmed by the Commissioner by distinguishing between the activity of "Sales Promotion" and "Sales". The Commissioner relied upon the decision of the Gujarat High Court in the case of CCE, Ahmedabad- II vs. Cadila Healthcare ltd., - 2013 (30) STR 3 (Guj) for this purpose. He confirmed interest and penalties as well. The appellants are in appeal against the said order before this Tribunal. 4. The learned Counsel for the appellant brought to ou .....

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linked to actual sale. Reading the provisions harmoniously it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis. 4.1 The learned Counsel for the appellant submits that CBEC has clarified that credit of service tax paid on services of sales of dutiable goods on commission basis. He further pointed out that the same Commissioner of Central Excise has subsequently taken different stand on the same issue in the case of Bhushan Steel Ltd. (Order-in- .....

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Ahmedabad-II vs. Cadila Healthcare Ltd., - 2013 (1) ECS (1) Guj HC) to hold that credit is eligible on "Sales Commission" when it includes sales promotion also and not on pure sale alone. It was also felt that Boards Circular No. 943/4/2011-CX dated 29/04/2011 had clarified that input service credit is admissible with reference to the head "Sales Promotion" and not to mere sale activity. The Chief Commissioner while reviewing the order has vide letter No. F. No. IV/17-101/CC .....

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activity of sale promotion is specifically allowed and nowhere does it restrict the same as "sales promotion". 4.2 The learned Counsel also submits that the activity undertaken by them is not merely sales of goods but sales promotion. In support of the same, they produced the following: i) Letters written by their agents to various consumers offering them the products manufactured by the appellant. ii) The advertisement placed by them in various newspapers advertising their products m .....

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verseas - 2010 (20) STR 514 (Tri) b) Upheld by P&H High Court - 2012 (25) STR 348 (P&H) c) Ultratech Cement Ltd. - 2010 (26) ELT 369 (Bom) d) Bhilai Auxiliary Industries - 2009 (14) STR 536 (Tri) e) Pan Asia Corporation - 2009 (16) STR 587 (Tri) f) Lanco Industries Ltd. - 2010 (17) STR 350 (Tri) g) Rightway Fabrics - 2011 (24) STR 505 (Tri) h) HEG Ltd., - 2010 (18) STR 446 (Tri) i) Rosa Sugar Works - Appeal No. 149-153 of 2011 (SM) j) Birla Corporation Ltd. - 2014 (35) STR 977 (T) 4.4 Th .....

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(35) STR 674 (Guj) d) CCE vs. Paras Motors Mfg. Co. - 2013 (31) STR 81 (Tri-Ahmd) 5.1 He further submitted that the activity undertaken by them is not a "Sales Promotion activity" but "sales activity". His assertion was that to claim the activity as "Sales Promotion" activity the appellant needs to produce evidence to the fact that there was indeed an increase in the sales of goods as a result of their activity. 6. We have considered the submissions made by both th .....

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e issue. The same Commissioner has in his later order stated so (para 4.1 of this order refers). 6.3 We find that the decisions of this Tribunal in the case of Rosa Sugar Works vs. CCE, Lucknow - Appeal No. 149-153 of 2011 (SM) is clearly applicable to this case. The said decision has been given after considering the decisions of Cadila Healthcare Ltd. The Tribunal in the case of Birla Corporation Ltd., Vs. CCE, Lucknow- 2014 (35) STR 977 (Tri-Del) has examined a case under similar circumstances .....

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at High Court in the case of Cadila Health Care Ltd. (supra), wherein in para 5.2, a contrary view has been taken and in that judgment, Hon'ble Gujarat High Court after discussing in detail has held that the service of commission agent for procuring sales orders is neither covered by the expression "sales promotion" nor by the expression "activities relating to business". Hon'ble High Court in this judgment has observed that the term, "activities relating to busi .....

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llustration of the "activities relating to business". 7.1 However, I find that the Hon'ble Bombay High Court in the case of Ultratech Cement reported in 2010 (260) E.L.T. 369 (Bombay) = 2010 (20) S.T.R. 577 (Bom.) in para 28 and 29 has given the following interpretation of the expression "activities relating to business" :- "28. In the present case, the question is, whether outdoor catering services are covered under the inclusive part of the definition of "inpu .....

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ellip;..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 of the definition of "input service" covers various services used in relation to the business of manufacturing the final products. In other words, the definition of "input service" is very wide and covers not only services, which are directly or indirectly used in or i .....

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"activities in relation to business" in the definition of "input service" postulates activities which are integrally connected with the business of the assessee. If the activity is not integrally connected with the business of the manufacture of final product, the service would not qualify to be a input service under Rule 2(l) of the 2004 Rules." 7.2 Thus in paras 28 and 29 of the above judgment, Hon'ble Bombay High Court has in clear terms held that the expression .....

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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 ha .....

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urt have not been considered in the judgment of Hon'ble Gujarat High Court in case of Cadila Health Care Ltd. (supra). 7.3 In any case, when the judgment of two High Courts, on this issue, are in favour of the appellant and besides this, a number of judgments of the Tribunal, as mentioned above, are also in favour of the appellant, it is those judgments which have to be followed. 8. Rule 2(l) of Cenvat Credit Rules, 2004 was amended w.e.f. 1-4-2011 and by this amendment, the expression " .....

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