Case Law Details
Brief Facts of the case
The appellant is engaged in the manufacture of motorcycle and procures the service of advertising agency for the purpose of advertising their final product. They pay the value of the services to the advertising agency along with the amount of Service Tax leviable thereon. Consequently, they are entitled to the Cenvat credit of Service Tax so paid by them on the advertising cost. As the appellant is a 100% subsidiary of their parent company located in Japan, the part of the advertising expenditure incurred by them are being received by them from their parent company. The Revenue’s only objection for denial of Cenvat credit of Service Tax paid by the appellant is that their parent company has reimbursed the part of the cost of advertisement expenses and as such, they have not incurred the entire advertisement expenses from their pocket.
Contentions of the Assessee
The appellants contended that admittedly the entire advertisement expenses are being incurred by them initially. It is they who pay the advertising agency along with the amount of Service Tax. The entire advertising expenses are being reflected by them in their balance sheet. If subsequently they are reimbursed by their parent company to some extent, the same would not change legal scenario. Having paid the entire cost of advertising charges along with Service Tax from their own pocket, they are entitled to the credit of Service Tax so paid by them. Revenue should not be concerned with further financial arrangements between parent company and the subsidiary company.
Contentions of the Revenue
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