Case Law Details
Urvashi Porwal
Brief of the Case
In the case of Monarch Catalyst Pvt. Ltd. Vs. Commissioner of Central Excise, Thane-I, it was held that the services of commission agent abroad is input services as the commission agent procured the orders for the appellant and thereafter the appellant manufactured the goods. Therefore, CENVAT credit of service tax paid on such services is available.
Facts of the Case
The appellant is engaged in the manufacture of nickel catalyst and other catalyst, nickel aluminium alloy etc. classifiable under Chapters 28, 38 and 75 of the Central Excise Tariff Act, 1985 and are chargeable to duty. The appellant also sells their products to customers located outside India. In order to procure orders from the foreign buyers, the appellant has appointed commission agents at various locations outside India under written agreement. These agents promote the sale of the product and procure orders for the appellant and the commission is paid on the FOB value of the goods exported. The appellant further alleged that in terms of the provisions of Rule 4 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, the appellant has registered with the central excise and as receivers of services in India pays service tax on reverse charge basis as required under the provisions of Section 66A of the Finance Act, 1994 read with Rule 2(iv) of the Service Tax Rules, 1994 and files returns in form ST-3. The appellant has been paying service tax and availing credit of service tax paid being input services and there has been no dispute raised by the department during the period from 2006 i.e. from the time the appellant has been availing credit of such service tax on the amount paid to the commission agent located outside India. The appellant further alleged that by Notification 41/2007-ST dated 6.10.2007, exemption is provided to the services received by the exporter from certain service providers, which are specifically specified in the said notification. This notification was further amended by Notification No.17/2008-ST dated 1.4.2008 and by this notification, exemption is specifically provided to services provided by the commission agent located outside India and engaged under a contract or agreement. The appellant further submits that for the first time in February 2010, the departmental audit officers objected to the availment of credit by the appellant on the ground that w.e.f. 7.7.2009, the services of commission agent located outside India became exempt in terms of Notification No.18/2009-ST dated 7.7.2009 and there was no need of payment of service tax on such services. Thereafter the appellant received a show cause notice wherein the department sought to recover cenvat credit amounting to Rs.34,69,947/- allegedly wrongly availed by the appellant during the period from April 2006 to June 2009 under the proviso to sub-section (1) of Section 11A of the Central Excise Act read with Rule 14 of the Cenvat Credit Rules, 2004 along with interest and penalty under Section 11AB and 11AC respectively. The appellant submitted detailed reply to the show cause notice denying all the allegations in the show cause notice with the help of decided cases by the Tribunal and the Hon’ble High Court. The learned Additional Commissioner, however, vide his order dated 31.8.2012 accepted the submission of the appellant that services rendered by the commission agent based outside India are input services for the appellant but failed to accept the submissions on limitation and availability of cenvat credit instead of refund under Notification No. 41/2007-ST and consequently passed the order against the appellant. Thereafter the appellant filed appeal before the Commissioner (Appeals) who vide his order dated 20.2.2013 upheld the order-in-original. Hence the present appeal before this Tribunal.
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