The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in the case of Beloorbayir Bitech Limited v. Commr. of Central Tax constituting of Mr. S.S. Garg as the judicial Member held that CENVAT Credit on Sales Commission paid to the Commission Agents is admissible.
The appellants are engaged in the manufacture and clearance of herbal extracts glucosamine and other drugs falling under subheading 1302 1919, 2815 1110 and 2942 0090 of the Central Excise Tariff Act, 1985. It was found out that the assessee had availed the CENVAT credit on ‘sales commission’ paid to the commission agents.
The issue before the present Tribunal is that whether the assessee is liable to reverse the wrongly availed credit since service tax paid on commission to domestic agents does not fall under the scope of input service.
The assessee while referring to the Board Circular No. 943/4/2011-cx dated 29.04.2011 contended that the definition of ‘input service’ allows all services used for clearance of final products upto the place of removal. The activity of sales promotion is exclusively allowed. Hence, on a harmonious interpretation of the provisions, it is affirmed that the credit is admissible on the services of sale of dutiable goods on commission basis.
After considering the contentions of both the parties, the Tribunal held that “an activity which amounts to sale of the products is deemed to be sales promotion activity in the normal trade practice. The commission is paid on sales of the products/services with an intention to boost the sale of the company.
The Tribunal further set aside the order of the Adjudging Authority and allowed the appeal holding that such credit can be availed by the assessee.
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