DSCL SUGAR Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) AFTER dispensing with the condition of pre -deposit of duty of Rs. 4,09,940/ - and penalty of identical amount, I proceed to decide the appeal itself inasmuch as the disputed issue stands decided in favour of the appellants by the precedent decision of the Tribunal. After hearing both sides, I find that the appellants are engaged in the manufacture of sugar. For sale of their filial product, they availed the services of the commission agent, and are paying Service tax on the said services under the category of Business Auxiliary Services. They availed the Cenvat credit of Service tax so paid by them on the services of commission agent. Revenue is of the view that they are not entitled to avail Cenvat credit inasmuch as commission agent services cannot be considered to be eligible cenvatable services. Accordingly, proceedings were initiated against the appellants by way of issuance of show cause notice dated 25 -9 -2009 raising demand of duty for the period 1 -4 -2007 to 30 -8 -2009. The show cause notice stand culminated into the impugned order passed by the original adjudicating authority and upheld by the Commissioner (Appeals). Hence, the present appeal.

(2.) THE short question required to be decided is as to whether the service tax paid on commission agent services is available as Cenvat credit to the appellants by treating the same as input services in terms of Rule 2(1) of Cenvat Credit Rules, 2004. The lower authorities have held that inasmuch as the said activities are post manufacturing and post clearance activities, they do not satisfy the definition of inputs services. On the other hand, it is the appellants contention that services of commission agent are, in fact, received prior to the clearance of goods, and it is based upon the orders procured by them, the goods were cleared from their factory. As such, the Revenue's stand that the same are related to post clearance activities cannot be upheld.

(3.) I find that Tribunal's decision in the case of Bhilai Auxiliary Industries referred supra stands passed before the decision in the case of Chemplast Sanmar Ltd. The said judgment in the case of Bhilai Auxiliary Industries relies upon the Division Bench judgment of the Tribunal in the case of Metro Shoes Pvt. Ltd. v. CCE, Mumbai -I as reported in : 2007 (8) S.T.R. 502 as also in the case of CCE, Ludhiana v. Abhishek Industries Ltd. as reported in : 2008 (9) S.T.R. 562 (Tri. -Del) and the decision in the case of Chemplast Sanmar Ltd. has not taken note of either Bhilai Auxiliary Industries decision or the Division Bench judgment in the case of Metro Shoes. I also note that there are another Division Bench judgment in the case of Lanco Industries Ltd. v. CCE, Tirupathi as reported in : 2010 (17) S.T.R. 350 (Tri. -Bang) laying down, after taking note of the Division Bench judgment in the case of Metro Shoes that Service tax paid on commission agent in respect of sales made through such agent is admissible for Cenvat credit. It seems that the said Division Bench judgment in the case of Lanco Industries Ltd. escaped the attention of the Single Member Bench deciding the issue in the case of Chemplast Ltd. Further, the Tribunal's decision in the case of Cadila Healthcare Ltd. v. CCE, Ahmedabad as reported in : 2010 (17) S.T.R. 134 (Tri. -Ahmd.) also held that the Foreign Commission agent service for sale promotion, are input services and credit on Service tax paid on the same is admissible. As such, I note that there are catena of judgment laying down that the Service tax paid on the commission agent services is available as modvat credit. As such, I hold that the impugned orders denying such credit are not sustainable.