Service Tax
TRT-2025-
Cestat Kolkata
Date:-03-02-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 03 February 2023
Parties: Moulded Fibreglass Products Vs Commissioner of CGST & CX, Kolkata South Commissionerate
Facts –
- The Appellant, Moulded Fibreglass Products is a manufacturer of tailor made goods as per individual customer’s requirement. The goods manufactured by the Appellant fall under Chapter 86 as well as Chapter 39 depending upon the usage as well as classification criteria.
- Show Cause Notice dated 31.03.2016 was issued alleging contravention of the provisions of Rule 3(i) read with Rule 2(l) of the CENVAT Credit Rules, 2004, that the assessee during the period from 01.04.2011 to 31.03.2015 irregularly availed input service credit on services of Sales Commission.
Issue –
- Whether the appellant is eligible input services credit?
Order –
- The Tribunal observed that instant case arbitrates around the admissibility of the input service credit on sales commission paid to various agents. It has been observed that during 01.04.11 to 31.03.2015, the appellant had taken CENVAT Credit of input service on sales commission paid to different agents. Rule 2(l) of the CENVAT Credit Rules, 2004 defines input service. With effect from 01.04.2011, the definition of input service got narrowed and the expression ‘activities related to business’ was omitted. Department referred to Cadila judgement to confirm the demand, as sales commission is not covered in the inclusive part of the definition of Input Service.
- It was held that the explanation inserted vide notification 2/2016-CE dated 03.02.2016 was issued for explaining the clause ‘Sales Promotion’ in the context of rule 2(I) of the CCR’ 04. It provided an additional support to ‘Sales Promotion’ to make it meaningful and purposeful. It is also in consonance with the CBEC Circular dated 29.04.2011.
- It was also held that the commission paid on sales becomes part of sales promotion resulting in increased manufacturing activity. The sales commission has a direct nexus with the sales, which in turn is related to the manufacture of the products
- The appeal is allowed.
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