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June 2014

2014 (33) STR 238 ( Tri-Del.) Commr. Of C.Ex., Ludhiana vs. Forgings & Chemicals Industries

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Whether commission paid to overseas agent for procuring orders from overseas is input service eligible for CENVAT credit? Held yes.

Facts:
The respondent had overseas agents for procuring export orders and claimed CENVAT credit of service tax paid on commission paid to them. The department has denied CENVAT credit. The First Appellate Authority held that the Business Auxiliary service of procuring export orders received from overseas agent has to be treated as an input service, as the definition of “input service” is to be interpreted in the light of requirement of business and it cannot be read restrictively so as to confine only upto factory or upto the depot of the manufacture and setaside the order. An appeal was filed by Revenue against that order.

Held:-
Rejecting revenue’s contention, the Hon’ble Tribunal held that the definition of ‘input service’ covered the activities of advertisement or sales promotion and also the activities related to business. The service of procuring export order is clearly covered in marketing and sales promotion services and it is also an activity related to manufacturing business of the applicant. Thus, it is input service eligible for CENVAT credit.

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