Federal Mogul TRP (India) Ltd Vs Commissioner of Central Tax (CESTAT Bangalore)
We find that input service as defined under Rule 2(l) of CENVAT Credit Rules, 2004 explicitly includes activity of sales promotion and the explanation to Rule 2(l) of CENVAT Credit Rules, 2004 inserted by Notification No.2/2016-CE(NT) dated 3.2.2016 holding that sales promotion includes services by way of sale of dutiable goods on commission basis.
We also find that this explanation added by way of amendment is declaratory in nature and is applicable retrospectively as held in the decision in the case of Essar Steels India Ltd. and others cited supra. We also find that in appellant’s own case for the subsequent period, this Tribunal vide its Final Order No.20201-20205/2019 dated 25.2.2019 has allowed the credit on sales commission covering the period January 2015 to February 2016.
We also note that the Board vide Circular No.96/85/2015-CX dated 7.2.2015 has clarified that decision in the case of Cadila Healthcare Ltd. cited supra applies in case where the agent is undertaking only sales and no sales promotion. Whereas in the present case, it is clearly evident from various terms and conditions contained in clause (3) of the Agreement that M/s. FMGIL undertakes the activity of sales promotion.
Hence, we hold that the decision in the case of Cadila Healthcare Ltd. is not applicable in the present case. This issue is no more res integra and has been settled in favour of the assessee in various decisions cited supra wherein it has been consistently held that sales commission fall under definition of ‘input service’. By following the ratio of the above said decisions, we hold that denial of CENVAT Credit on sales commission is not sustainable in law.
FULL TEXT OF THE CESTAT JUDGEMENT
The appellants have filed these four appeals against the impugned orders dated 20.12.2011, 30.1.2012, 6.11.2013 and 3.4.2017 passed by the Commissioner of Central Taxes whereby the Commissioner has denied the CENVAT credit on sales commission paid to sister concern and Commissioner has also denied the CENVAT credit on service tax paid on outward transportation from factory to the buyers premises during the period from April 2008 to April 2010 and also imposed penalties. Since the issue involved in all the four appeals is identical, therefore, all the appeals are being disposed of by this common order. The details of all the four appeals are given herein below:
