Phillips Carbon Black Limited Vs Commissioner of Central Goods & Service Tax (CESTAT Kolkata)
The appeals were filed against an Order-in-Original dated 20.02.2018 passed by the Commissioner of Central Goods & Service Tax. The appellant, a manufacturer of carbon black, had availed Cenvat credit on various inputs, capital goods, and input services, including services provided by commission agents. These agents promoted products, canvassed orders, effected sales, conducted market research, and provided information reports on behalf of the appellant. Their remuneration was linked to the actual sales generated.
The department took the view that the activities performed by commission agents were post-removal activities and therefore did not qualify as “input services” under Rule 2(l) of the Cenvat Credit Rules, 2004. Consequently, a show cause notice was issued proposing denial of Cenvat credit amounting to ₹3,34,04,404 for the period from April 2012 to June 2016. A personal penalty was also proposed against the Deputy Manager (Accounts) on the allegation that he was aware of the availment of inadmissible credit and failed to reverse it.
Upon adjudication, the authority dropped a portion of the demand amounting to ₹19,58,012 relating to the period from 03.02.2016 to June 2016, following an amendment made on 03.02.2016. However, it confirmed the disallowance of the remaining Cenvat credit of ₹3,14,46,392 on sales commission services and imposed penalties, including a personal penalty on the Deputy Manager (Accounts).
