Custom, Excise & Service Tax Tribunal
Cce, Bangalore-Iv vs M/S. Suprajit Automotive Pvt. Ltd on 10 October, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/21353,21354/2015-SM [Arising out of Order-in-Appeal No. 29 & 30/2015 dt. 16/03/2015 passed by CCE(Appeals-II), BANGALORE-I] CCE, Bangalore-IV Appellant(s) Versus M/s. Suprajit Automotive Pvt. Ltd. Respondent(s)
Appearance:
Shri Madhupsharan, Asst. Commissioner(AR) For the Appellant Shri Raghavendra, Advocate For the Respondent Date of Hearing: 26/09/2017 Date of Decision: .................... CORAM:
HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER Final Order No. / 2017 Per : M.V.RAVINDRAN Appeal are filed by the Revenue against the Order-in-Appeal No. 29 & 30/2015 dt. 16/03/2015.
2. Heard both sides and perused records.
3. On perusal of records, it transpires that the issue is regarding availment of CENVAT credit by the respondent who is an exporter 100% EOU.
4. It transpires from the records that the respondent being a 100% EOU appointed M/s. Suprajit Europe Ltd. under an agreement to to function as a commission agreement for the services of sales promotion and marketing of the products in abroad. Consequent to such agreement, the respondent paid the an amount to the upcountry entity and by virtue of provisions of Section 66A of the Finance Act, 1994 discharged the service tax under reverse charge mechanism and availed CENVAT credit and filed refund claims. The adjudicating authority rejected the refund claim of this amount of service tax credit on the ground that it being sales commission, the law as laid down by the Honble High Court of Gujarat in the case of Cadila Healthcare Ltd. [2013(30) STR 3 (Guj.)] and Dynamic Industries Ltd. [2014(307) ELT 15 (Guj.)] holding credit is ineligible. Aggrieved by such an order of rejection of the refund claims, appeals were preferred before the first appellate authority. The first appellate authority after considering the issue from the factual matrix and appreciating the agreement between the respondent herein and the upcountry entity, came to a conclusion that the amounts paid by the respondent are for the sales promotion and marketing undertaken in respect of the goods manufactured and exported. He records the following findings.
6.3. In the said definition services such as advertisement or sales promotion and market research are also included. The lower authority has tried to distinguish the ratio decisions relied upon by the appellant on the ground that sales commission paid to agent for sales promotion is different as in this case the commission agent has not procured any orders for the Indian company but has acted as a distributor for the products manufactured and exported by the appellant. Whereas the appellant contends that the products are directly sold to the clients for whom orders are obtained by the foreign agent, hence the refund claimed in this case pertains to commission paid to the foreign agent for procurement of orders and this is nothing but sales promotion only. It can be seen from the findings of the lower authority at para 4 f the Order-in-Original that what is paid is commission for products sold directly to their customers in Asia, Europe and other countries and the European company provides services related to exported goods, manufactured by the India company and also renders marketing and sales services. Hence it cannot be said that the goods are sent to the foreign agent for distribution. Therefore, I agree with the contention of the appellant that the activity rendered by the foreign company is sales promotion.
5. In the grounds of appeal, it is the contention of the Revenue that the adjudicating authority was correct in coming to a conclusion that there was no sales promotion but it was the commission paid by the respondent to upcountry entity and the agreement indicated the activity of advertisement etc. is not directly concerned with the sales and not the sales promotion. The learned AR relied upon the same judgments as has been relied upon by the adjudicating authority i.e. Cadila Healthcare and Dynamic Industries.
6. Learned counsel submits that the plain reading of the agreement between the respondent and the upcountry entity would indicate that the upcountry entity is doing marketing, sales promotions of the products manufactured by the respondent. He would submit that the Tribunal in the case of Liebherr Machine Tools India (P) Ltd. Vs. CCE, C & ST, Bangalore-II [2016(44) STR 633 (Tri. Bang.)], Bhuruka Gases Ltd. Vs. CCE,C&ST, Bangalore-I [2015(37) STR 818 (Tri. Bang.), Novozymes South Asia Pvt. Ltd. Vs. CCE, Bangalore [2015(38) STR 204 (Tri. Bang.)] has considered similar set of facts and held that CENVAT credit is eligible to be availed on the service tax paid on such amounts.
7. On careful consideration of the submissions made, I find from the reading of the marketing representation agreement between the respondent and the upcountry entity, clearly spells out the responsibilities of the upcountry entity which includes assisting the respondent in various activities and manage regarding marketing and sales objectives to be achieved. This would mean that the upcountry entity has to also do the promotional activities in respect of the goods manufactured and exported by the respondent. I find that the first appellate authority has correctly recorded the factual matrix in the matter and held that CENVAT credit is available to respondent herein of the service tax paid under reverse charge mechanism. I do not find any reason to interfere in such a well reasoned order and hold that the impugned order is correct and legal and has followed the law as has been enunciated by the Tribunal in various cases as cited hereinabove.
8. The impugned order is upheld and the appeals are rejected.
(Order pronounced on ......................) M.V.RAVINDRAN JUDICIAL MEMBER Raja...
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