Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. Ambika Overseas on 20 July, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 1287 of 2008-SM(BR)
[Arising out of Order-in-Appeal No. 119/CE/APPL/JAL/2008 dated 27.3.2008 passed by the Commissioner of Central Excise (Appeals) Jalandhar ]
For approval and signature:
Hon'ble Mr. M. Veeraiyan, Member (Technical)
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 :
of the CESTAT (Procedure) Rules, 1982 for
publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair :
copy of the Order?
4. Whether Order is to be circulated to the :
Departmental authorities?
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Commissioner of Central Excise Appellants
Jallandhar
Vs.
M/s. Ambika Overseas Respondents
Appearance: Shri S.K. Bhaskar, DR for the Appellants
Shri Ravi Chopra, Advocate for the Respondent
Date of Hearing /decision: 20.7.2010
ORAL ORDER NO . ________________________
Per M. Veeraiyan:
This is an appeal by the department against the order of the Commissioner (Appeals) No. 119/CE/APPL/JAL/2008 dated 27.3.2008.
2. Heard both sides.
3. The respondents are a manufacturer of hand tools and part of the goods manufactured by them are being exported. The respondents appointed Overseas Commission Agents who are entrusted with the job of canvassing and procuring orders for the products in overseas market and, thus, helping them in sales of the goods and in following up of the payments from the overseas buyers. The said overseas commission agents did not have offices in India. The proceedings were initialled against the respondents and they were directed to pay the service tax on the overseas commission paid by them in their capacity as recipient of services. The respondents paid the service tax amounting to Rs.4,20,592/- on 25.8.06 along with interest. Immediately thereafter they have taken Rs.4,20,592/- as credit of service tax paid by them by treating the said services as input services. The department issued a show cause notice dated 26.10.06 alleging that the services rendered by overseas commission agents cannot be treated as inputs services and seeking to deny the credit and proposing to impose penalties. Original authority disallowed the credit and ordered recovery of Rs.4,20,592/- and imposed penalty of equal amount under Rule 15 of the Cenvat Credit Rules, 2004. Commissioner (Appeals) has set aside the order of the original authority.
4. Learned DR submits that the nature of activities undertaken by the overseas commission agents are such that the said services rendered by them cannot be held to be utilised in the manufacture of final products and therefore, the same cannot be treated as inputs services. Learned DR also submits that the activities of the commissioner agents are post removal activities.Further, the respondents have not taken the Cenvat credit on eligible documents. As manufacturer they ought to have taken the credit on the basis of documents issued either under Rule 9(1)(a) or under Rule 9(1)(b) of the Cenvat Credit Rules.
5. Learned Advocate for the respondents strongly supports the order of the Commissioner (Appeals). Drawing the attention of the definition of inputs services, he submits that the term inputs services includes to any services used in relation to sales promotion. The activities of overseas commission agents which includes canvassing and procuring orders are clearly part of sales promotion activities and, therefore, the same is rightly to be treated as inputs services. He also submits that as recipient of input services, they were required to pay service tax which was paid by them under TR 6 challans and based on the said documents, Cenvat credit has been rightly taken by them.
6. I have carefully considered the submissions from both sides. The canvassing and procuring orders are activities preceding removal of the goods by the manufacturers. Without the firm order, the respondents were not expected to remove the goods to a foreign destination. Therefore, the submission of the learned DR that these activities are post removal activities cannot be accepted. Further, the definition of the inputs services includes services used in relation to sales promotion, and these activities can rightly be described as sales promotion activities. Sales promotion activities undertaken at a given point of time also aims at sales of goods which are to be manufactured and cleared in future. Any advertisement given has a long term impact and cannot be treated as post clearance activities and therefore, sales promotion has been specifically included in the definition of input services. As regards the other contention that the documents on which the respondent has taken the credit is not the prescribed document, it is to be noted that the respondents is not a service provider per se. They are basically the service recipients. They are required to pay the service tax as a deemed service provider. Under these circumstances, the respondents have paid service tax using TR 6 challans and taken credit treating the said documents as documents covered by Rule 9(1)(e) of the Cenvat Credit Rules, 2004. There is nothing irregular about it.
7. In view of the above, I hold that no valid reason has been adduced to interfere with the order of the Commissioner (Appeals). The appeal is, therefore, rejected.
( M. Veeraiyan ) Member(Technical) ss 4