Admissibility of CENVAT Credit on Sales Commission on Dutiable Goods prior to 03/02/2016
IN a recent meeting of the Central Excise Regional Advisory Committee of the Vadodara Zone, a question was raised on the admissibility of Cenvat Credit on Sales Commission ON DUTIABLE GOODS prior to 03/02/2016 in light of the CESTAT Ahmedabad order, in the case of M/s ESSAR STEEL INDIA LTD Vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, SURAT -1 - 2016-TIOL-520-CESTAT-AHM
The Department clarified, "The legal position is that the department has not accepted the order of CESTAT, A'bad in the case of M/s Essar Steel Ltd and challenged the jurisdiction of the CESTAT to determine retrospective application of explanation inserted in Rule 2(l) of CCR,2004 by Notification No . Further the matter has already been referred to the Board for clarification/advice."
DDT adds: The Gujarat High Court admitted the Department's appeal on 14th of this month with the following substantial questions of Law.
A. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that the services rendered by the marketing agents to the respondent is in the nature of “sales promotion” within the meaning of Rule 2(l) of the Cenvat Credit Rules, 2004 and not in the nature of sales commission as held by the adjudicating authority?
B. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that on rendering of agency agreement/s between the respondent and its agents, the services rendered by the agents is to help in exploring marketing feedback and developing clients for enhancing the market share, and therefore, such agreement would be constructed as sales promotion agreement?
C. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that explanation inserted in Rule 2(l) of the Cenvat Credit Rules, 2004 by notification No.2/2016-CX(NT) to be declaratory in nature and it has retrospective effect? D. Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that the availment of the Cenvat Credit by the respondent on input service received from its agent is permissible in law, and therefore, demand of duty along with interest and imposition of penalty by the adjudicating authority is liable to be set aside?