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2018 (7) TMI 97

in the inclusive part of the definition of input service provided under Rule 2 (l) of the Cenvat Credit Rules, 2004? - Held that:- Whether the explanation added in Rule 2 (l) of Cenvat Credit Rules, 2004 vide notification dated 03/02/2016 has retrospective effect or not, has come before this Tribunal in the matter of Essar Steel India Ltd. vs. CCE & ST, Surat – I [2016 (4) TMI 232 - CESTAT AHMEDABAD] in which this Tribunal has held that the explanation inserted in Rule 2 (l) of Rules 2004 by Notification No. 2/2016-CX (NT) should be declaratory in nature and effective retrospectively. - Explanation to Rule 2 (l) of Rules 2004 says it in clear terms that there is no bar on availment of Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis - the explanation inserted in Rule 2 (l) of Rules 2004 by notification dated 03/02/2016 is declaratory in nature and has to be complied retrospectively - appeal dismissed - decided against Revenue. - Service Tax Appeal No. 51179 of 2018 (SM) - Final Order No. 52380/2018 - 2-7-2018 - Hon ble Shri Ajay Sharma, Member ( Judicial ) Shri K. Poddar, Authorized Representative ( DR ) - for the appellant Shri Moh .....

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04, as such the appellants were entitled to avail the subject credit and the same has been correctly availed. I therefore, find it proper to set aside the impugned orders disallowing the credit and ordering for recovery of the same alongwith interest. Consequently, imposition of penalties becomes void . 5. I have heard learned DR for the Department and learned Consultant for the respondent/assessee and perused the record. 6. The issue involved in the instant appeal is whether the commission paid to the sales/commission agents is related to promotion of any activity specified in the inclusive part of the definition of input service provided under Rule 2 (l) of the Cenvat Credit Rules, 2004. Rule 2 (l) of Cenvat Credit Rules as well as amendment carried out in the definition of input services under Rule 2 (l) vide Notification No. 2/2016-CE (ST) dated 03/02/2016 which are necessary for the purposes of determining of the issue involved in the instant appeal are extracted as under :- Rule 2 (l) input service means any service, - (i) used by a provider of [output service] for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation t .....

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without availing the services of sales/commission agent. 8. The learned Consultant appearing for the respondent/ assessee on the other hand supported the impugned order passed by the learned Commissioner (Appeals). 9. Whether the explanation added in Rule 2 (l) of Cenvat Credit Rules, 2004 vide notification dated 03/02/2016 has retrospective effect or not, has come before this Tribunal in the matter of Essar Steel India Ltd. vs. CCE & ST, Surat - I reported in 2016 (335) E.L.T. 660 (Tri. - Ahmd.) in which this Tribunal has held that the explanation inserted in Rule 2 (l) of Rules 2004 by Notification No. 2/2016-CX (NT) (supra) should be declaratory in nature and effective retrospectively. The relevant paragraph of the said decision has been extracted as under :- 20. But, the Hon ble Gujarat High Court in the case of Cadila Healthcare Ltd. (supra) was unable to concur with the contrary view taken by the Hon ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Ludhiana v. Ambika Overseas (supra). The Hon ble Gujarat High Court held that this issue is concerned, the question is answered in favour of the Revenue and against the assessee. In this backgr .....

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ourt had not referred to the Circular dated 29/04/2011 and also there were divergent views by the Hon ble Punjab & Haryana High Court in the case of CCE, Ludhiana vs. Ambika Overseas - 2012 (25) S.T.R. 348 (P&H). Considering the conflict in judgments of different High Courts and also the notification dated 03/02/2016, this Tribunal in the case of Essar Steel India Ltd. (supra) has held that the said notification should be considered as declaratory in nature and effective retrospectively. The relevant paragraph in the said decision is extracted herein below :- 20. But, the Hon ble Gujarat High Court in the case of Cadila Healthcare Ltd. (supra) was unable to concur with the contrary view taken by the Hon ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Ludhiana v. Ambika Overseas (supra). The Hon ble Gujarat High Court held that this issue is concerned, the question is answered in favour of the Revenue and against the assessee. In this background, legislature explained the meaning of the sales promotion by inserting Explanation in Rule 2(l) of Rules, 2004 and declared that sales promotion includes services by way of sale of dutiable goods on .....

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