area, t1ra2.14.4q) 711 WA' ag1111: Date of Issue :

Transcription

1 wrzfrea, 31Tr, a stzt rezrc tpu, 3rturcrarr -4-1 OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE, AHMEDABAN area, t1ra2.14.4q) Actzr WrI-4 Tg CENTRAL EXCISE BUILDING, NEAR GOVT. POLYTECHNIC adarrant, narcrarc AMBAWADI, AHMEDABAD *r.#.: F.No: V.84/15-16/Nu-Vu/ADC/0A-1/2014 S: Date of Order : WA' ag1111: Date of Issue : ftfi. / Passed by: Sri ANIL MISRA, ADDITIONAL COMMISSIONER ************************************************************************?X& 31* Ti./Order-In-Original No.: 36/ADDITIONAL COMMISSIONER/2014 ******************************************************************************* ZrE (tn. 3# cola, (41) *1, 1 i h (ff.,'ir)40 ffiltzif 311kQT ali( f*#r 31 rr t, e a ( ) urr+,ra eq914 i=art M:Qle u 0-4-1# Ai& t I This copy E granted free of charge for private use of the person(s) to whom it is sent. u(d ml cord, rff Riker tf Rat ThT 3RtTE t, ag rff 31ib1 t rata 3199 brow, "171.5euIC!Real 3T0R, RIRTOT4t, R-1 5 Th-t Uke-1 f.v.-1 al 3NYcT rr tuner t 1315 S 1:111M-7 7t 31ra21 dial) ef # siw ZTIT un:r chief Sr c1 1W # a1 wrrt atilt i;t1trg,acir a I #7e 2.00/- 4uiet Th-ireluieR1 'J facpc WTI rdt oirat I Any person deeming himself aggrieved by this Order may appeal against this order in Form Commissioner (Appeals), Central Excise, Central Excise Bhavan, Near Government Polytechnic, Ambawadi, Ahmedabad -15 within sixty days from date of its communication. The appeal should bear a court fee stamp of Rs.2.00/- only. E.A.1 to 211.1B. T 121=OTT1 al 511R1 R. T.v.-1 alfirtrr#zr aaelf WFR I athot R.leeo (3S) P9.111(.441, 2001 t Poe{ 3 T { 3irftWC41311 TRITER f*v 70. ritcr I Su t f Tht riepcf %ea' #rcr : The Appeal should be filed in form No. EA-1 in duplicate. It should be filed by the appellants in accordance with provisions of Rule 3 of the Central Excise (Appeals) Rules, It shall be accompanied with the following: 31TITR er Copy of the aforesaid appeal. 4 *r oraz# 33:r arr-at udidther ul*rfer it a 1-43 tt 4 t) 312.m1 311 SITat ti 31R1 11:141" b 2.00/- M-1 rer9ieiti 21e-41 2q'c 3fUezI #wr eirt a I Copies of the Decision (one of which at least shall be certified copy of the order appealed against) or copy of the said Order bearing a court fee stamp of Rs.2.00/-. L /Reference :cotiur 4 arsit row tft.a. F.No: V.84/15-16/Nu-Vu/ADC/ OA-I/ 2014 dated issued to M/s. Nu-Vu Conair Pvt. Ltd., Plot No.147 & 148, DEvraj Industrial Park, Piplaj Pirana Road, Piplej, Ahmedabad

2

3 Brief facts of the case: OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-I, 7th FLOOR, CENTRAL EXCISE BHAVAN, NEAR POLYTECHNIC, AMBAWADI, AHMEDABAD M/s. Nu-Vu Conair Pvt Ltd, Plot No.147 & 148, Devraj Industrial Park, Pipla- Pirana Road, Piplaj, Ahmedabad (here-in-after referred to as the 'said assessee' for the sake of brevity) is engaged in the manufacture of various products falling under Chapter 84 of the First Schedule to the Central Excise Tariff Act, 1985 and are availing the facility of CENVAT Credit under CENVAT Credit Rules, 2004 and holding Central Excise Registration No. AACCN5965GEM The said assessee is availing Cenvat Credit facility under the provisions of Cenvat Credit Rules, During the course of Internal Audit, in the month of July by the officers of Audit Wing of Central Excise, Ahmedabad I Commissionerate for the period July-2011 to February-2013, it was noticed that the said assessee had availed CENVAT credit of service tax paid on commission to local sales commission agents for the period from July, 2011 to February, Hon'ble High Court of Gujarat in case of Commissioner of Central Excise, Ahmedabad-II V/s. M/s. Cadila Health Care Ltd., 2013 TIOL-12-HC-AHM-ST dated & has held that the "commission agent is directly concerned with the sales rather than sales promotion and as such the service provided by such commission agent would not fall within the purview of the main or inclusive part of the definition of input service as laid down in rule 2(1) of the Cenvat Credit Rules Consequently, Cenvat credit would not be admissible in respect of the commission paid to foreign agents". Further, Hon'ble CESTAT, Ahmedabad, in the case of Commissioner of Customs & Central Excise, Surat-II Vs. Astik Dyestuff P. Ltd, vide Order No. A/10339/WZB/AHD/2013 dated has held that "the law laid down by Hon'ble High Court of Gujrat in the case of Cadila Healthcare (Supra) is squarely applicable to the facts of the present case. No distinction can be made between the commission paid to foreign agent and the agent operating within the territory of India because nature of services provided by both the categories of the agents are same. Consequently, Cenvat credit would not be admissible in respect of commission paid to Local Sales (Commission) Agents". 4. The definition of the term "input service" as given under rule 2(1) of the Cenvat Credit Rules, 2004 is reproduced asunder:- Q) "input service" means any service, (i) (ii) used by a provider of taxable service for providing an output service; or used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to

4 2 such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal; " 5. As per the definition of input service, any service, used by the manufacturer, should have a nexus with the manufacture and clearance of the final product upto the place of removal. Place of removal is well defined in Section 4(3)(c) of the Central Excise Act, Further the services which are enumerated in the inclusive clause, which applies both, in the context of the provider of output services as well as the manufacture. Therefore, in view of the definition of input service under Rule 2(0 of Cenvat Credit Rules, 2004, services used by the manufacturer in relation to the manufacture and clearance of the final product upto the place of removal alone would appear to be eligible. After the final products are cleared beyond the place of removal, there will be no scope for subsequent use of service to be treated as input services. Therefore, services utilized beyond the stage of manufacturing and clearance of the goods from the factory cannot be treated as input services. Thus, it appeared that for the purpose of ascertaining the admissibility of Cenvat Credit on services, the nature of service availed should be in consonance with the above parameters. Hence, it appeared that Cenvat Credit availed by the assessee in respect of Service tax paid to commission agent for sale of finished goods cleared to their customers is incorrect and contrary to the provisions of Rule 3 of Cenvat Credit Rules, 2004 read with Rule 2(0 (ii) of the Cenvat Credit Rules, Thus the same appeared to be recoverable alongwith interest. 6. Further, the provisions of Rule 3(1) of Cenvat Credit Rules, 2004, allowing a manufacturer or producer of final product or a provider of taxable service to take Cenvat Credit of various duties/taxes leviable under different provisions of law are read as under,- "RULE 3. CENVAT Credit - (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (ii) (iii) (iv) (v) (vi) (via) (vii) (vita) (viii) (ix) the service tax leviable under section 66 of the Finance Act and (x) (xa) (x0 paid on-

5 (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004, including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a jobworker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004." 7. The auditors noticed that the said assessee had wrongly availed CENVAT Credit of service tax amounting to Rs.12,16,925/- (for the period July 2011 to February 2013) paid on the sales commission paid to the local agents for the finished goods. Whereas, it appeared in light of legal provisions that the assessee has failed to comply with the statutory provisions & procedure laid down for availing the CENVAT Credit in as much as they have availed cenvat credit of service tax paid on sales commission paid to the local agents. The service provided by sales commission agents is not included/defined as input service in rule 2(/) of Cenvat Credit Rules, SR. No. Period Year S. Tax 12% Rs. Edu. Cess 2% Rs. S. Icl. & Edu Cess 1% Rs. TOTAL Rs. RG 23 II- A Credit Entry No. 1 31/08/ /04 10/08/ /12/ /07 31/12/ /03/ /11 31/03/2012 TOTAL Year % 2% 1% I 31/03/ /03 31/03/2013 TOTAL Gross Total Whereas, it appeared that services of commission agent us ed manufacturer are neither used directly nor indirectly, in or in relation to the manufacture of final products. Therefore, the said assessee appeared to have wrongly availed Cenvat credit of Service Tax on commission paid to local sales agent which does not fall within the purview of definition of input service Since, the services of local sales commission agent have no relation with the manufacturing activity and also do not appear to fall within the ambit of definition of input services as defined under Rule 2(0 of Cenvat Credit Rules, 2004, the manufacturer shall not be allowed to take credit on such ineligible service as per Rule 3 of Cenvat Credit Rules, Date

6 4 9. Further, services of the sales commission agent also do not appear to fall under the category of sales promotion. As per the definition of commission agent defined under clause (a) to the Explanation under section 65(19) of the Finance Act 1994, a commission agent is a person who acts on behalf of another person and causes sale or purchase of goods. In other words, the commission agent appeared to be directly responsible for selling or purchasing on behalf of another person and that such activity cannot be considered as sales promotion. There appeared to be a clear distinction between sales promotion and sale. A commission agent is directly concerned with sales rather than sales promotion. Therefore, the services provided by commission agent do not fall within the purview of the main or inclusive part of the definition of 'input service as laid down in rule 2(0 of the Cenvat Credit Rules, 2004 and it appeared that the said assessee is not eligible for CENVAT credit in respect of the service tax paid against commission given to commission agents. 10. Therefore further inquiry was caused and a statement of Shri Tarun A. Panchal, Dispatch Coordinator & Authorized Signatory of M/s Nu-Vu Conair Pvt. Ltd., was recorded, on , under Section 14 of Central Excise Act,1944, wherein he inter alia stated that the CENVAT Credit was taken by M/s. Nu-Vu Conair Pvt. Ltd ; that they at M/s Nu-Vu Conair Pvt. Ltd. avail and utilize CENVAT credit on sales commission paid to the local agents for finished goods. On being asked about the service rendered by the commission agents for which they are taking input service credit, Shri Panchal answered that as per the verbal understanding between the company and the commission agents, some of the functions of the commission agents are to scrutinize inquires and prepare quotation, booking of order, provide forecast/ planning to principal for preparing manufacturing plan. He further furnished the details of CENVAT Credit availed by them during last five years on sales commission paid to the local agents. Shri Tarun A. Panchal also stated that they at M/s Nu-Vu Conair Pvt. Ltd. have stopped taking Cenvat credit on sales commission paid to local agents after April, 2013 to avoid further litigation. 11. Further Rule 9(6) of the Cenvat Credit Rules, 2004 stipulates that the burden of proof regarding admissibility of Cenvat Credit shall lie upon the manufacturer or provider of output service taking such credit. In the instant case, as discussed in foregoing paras, the credit taken in respect of services availed appeared to be inadmissible in as much as the same does not fall within the ambit of the definition of 'input services' as specified under Rule 2(0 of the Cenvat Credit Rules, In the instant case, it appeared that the said assessee knew that the services in respect of which they had taken Cenvat Credit were the services related to sales and which did not have any relation whatsoever in or in relation to manufacture of goods. Further, the services provided by commission agent have been held to be concerned with sales and not sales promotion by the Hon'ble High Court of Gujarat in the case of CCE, Ahmedabad-II v/s. M/s Cadila Healthcare Limited, 2013, TIOL-12-HC-AHM-ST dated & Further, Hon'ble CESTAT, Ahmedabad, in the case of Commissioner of Customs &

7 5 Central Excise, Surat-II Vs. Astik Dyestuff P. Ltd., vide order No. A/10339NVZB/AHD/2013 dated has held that "the law laid down by Hon'ble High Court of Gujarat in the case of Cadila Healthcare (Supra) is squarely applicable to the facts of the present case. No distinction can be made between the commission paid to foreign agents and the agents operating within the territory of India because natures of services provided by both the categories of the agents are same. Consequently, Cenvat Credit would not be admissible in respect of commission paid to local sales (Commission) Agents". Also Rule 2 (/) of Cenvat Credit Rules, 2004 defining what constitutes an input services, does not include Services related with sales in the definition of Input Services. 12. Further, the said assessee, in this era of self assessment when onus of taking legitimate Cenvat credit has been passed on to the assessee, took Cenvat credit in violation of Cenvat Credit Rules. The said assessee, though, it has been expressly provided in rule 9(6) of Cenvat Credit Rules, 2004 that "... admissibility of the Cenvat credit shall lie upon the manufacturer.."took burden of proof regarding the credit of service tax paid on commission paid to local commission agents which does not qualify to be included as "input service" defined under Rule 2(I) of Cenvat Credit Rules, Thus, it appeared that the said assessee have contravened the provisions of the Cenvat Credit Rules, 2004 by suppressing the facts with intent to evade payment of duty in as much as (i) the assessee has taken the Cenvat Credit on the service despite knowing that the same did not qualify as 'input services' (ii) the service has not been used in or in relation to the manufacture of final products and services were related to sales and not sales promotion and as such would not fall within the ambit of the definition of 'input service' (iii) by failing to discharge the obligation cast on them under Rule 9(6) of the Cenvat Credit Rules, 2004 and (iv) by not informing the department about the availment of credit of services tax paid on commission paid to local commission agents. Therefore, the said Cenvat Credit amounting to Rs. 12,18,009/-(Rupees Twelve Lakhs Eighteen Thousand Nine Only) appeared to have been wrongly taken and utilized for the payment of duties of excise which resulted in revenue loss to the Government during the period (from August, 2011) to (upto March, 2013) and the same is required to be recovered by invoking provisions of extended period of five years contained in section 11A (5) of the Central Excise Act, Rule 14 of the Cenvat Credit Rules, 2004 provides that where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer. In the instant case, the assessee appeared to have taken and utilised cenvat credit of service tax paid on commission paid to locals sales commission agents during the period from (from August, 2011) to (upto March, 2013). It also appeared that the said assessee has contravened the provisions of Rule 2 of Cenvat Credit Rules, 2004 read with Rule 3 of Cenvat Credit Rules, 2004 for credit taken of service tax paid on commission paid to

8 6 locals sales commission agents. The said assessee had taken and utilised an amount of Rs. 12,18,009/-/-(Rupees Twelve Lakhs Eighteen Thousand Nine Only) during the said period. The above amount of Rs. 12,18,009/- is required to be recovered under Rule 14 of Cenvat Credit Rules, 2004 read with erstwhile Section 11A(5) of the Central Excise Act, 1944 being the relevant provision of the law for the period from In view of the above, it appeared that the said assessee had contravened the provisions of Rule 2(0 read with Rule 3 of the Cenvat Credit Rules, 2004 in as much as they had taken credit of Service Tax paid on services which did not qualify as 'input services'; Rule 9(6) of the Cenvat Credit Rules, 2004 in as much as they had failed to discharge the burden of proof regarding admissibility of Cenvat Credit. Further, it appeared that the assessee has suppressed the material facts regarding taking of Cenvat Credit of duty paid on services not covered under the definition of input services, by way of not indicating the same in their monthly/quarterly returns or in any other manner. Therefore, the assessee had rendered themselves liable for penalty in terms of Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC (b) of Central Excise Act, 1944 for the above said contraventions. 15. Therefore, M/s. Nu-Vu Conair Pvt. Ltd, 147 & 148, Devraj Industrial Park, Piplaj- Pirana Road, Piplaj, Ahmedabad were called upon to Show Cause as to why:- Cenvat credit of Rs.12,18,009/-(Rupees Twelve Lakhs Eighteen Thousand Nine Only) for the period (from August, 2011) to (up to March, 2013) (Inclusive of Education Cess and Higher Education Cess) wrongly availed by them as Cenvat Credit of Service Tax should not be disallowed and recovered under Rule 14 of Cenvat Credit Rules,2004 read with Sections 11A(5) of Central Excise Act, (ii) Penalty should not be imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC (b) of Central Excise Act, (iii) Interest should not be charged & recovered for wrong availment of Cenvat Credit under Rule 14 of Cenvat Credit Rules, 2004 read with section 11AA of Central Excise Act, DEFENCE REPLY: 16. The assessee submitted their defence reply dated received on wherein they have stated that they have paid service tax on sales commission. It is part and parcel of the business activity. Therefore, as per the definition of input service which is reproduced in para 4 of the said SCN are covered the scope of business activity and therefore, the service tax credit is not deniable to that extent. 17. They submitted that normally the person who is involved in business does not cover interior area of product and also international market, he has to depend on person

9 7 who is in this line to expand the business of manufacturer and for that manufacturer pays something to those person who helps in their business for enhancement of sale. Therefore, this activity is directly connected with sales promotion. Therefore, the noticee has claimed/ availed service tax credit on sale commission within para meter of definition given in Cenvat Credit Rules, They also submitted that basic concept of the definition of input service is just like definition of input that all the inputs which are used in or in relation to manufacture of final product, the Cenvat credit is not deniable on inputs and just like it is for input service. 19. They submitted that the judgment reported in 2012 (025)STR 0348 (P&H) in the case of Ambika Overseas (in this case, the deptt has filed an appeal) wherein the Hon'ble HC of P&I-I held that respondent is entitled to avail the CENVAT credit on the services provided by Overseas Commission Agents (Provided in relation to canvassing and procuring of orders) as input services despite the fact that the services of "overseas commission agents" are post removal services and do not fall under the ambit of the definition of "input service" given under Rule 2(1) of Cenvat Credit Rules, 2004, which defines "input services" as the service used in or in relation to the manufacture or clearance of final products from the place of removal. Appeal of revenue rejected. Therefore, on this count, the service tax credit is not deniable. 20. They further submitted that service tax credit taken on the basis of earlier judgment rendered by higher authority including Tribunal. Therefore, there is no intention to claim wrongful credit. Therefore, on this count, penalty as proposed in the notice is not imposable. 21. They submitted that the SCN is issued only on the basis of judgment of Cadila Health Care Ltd. rendered by the Hon'ble High Court of Gujarat and this matter is challenged before Hon'ble Supreme Court. Therefore, they have prayed that this matter may kindly be kept pending till the decision of Hon'ble Supreme Court. PERSONAL HEARING: 22. The personal hearing in the matter was held on , wherein Shri Naimesh K Oza, Advocate appeared on behalf of the assessee for the same and reiterated the stand taken by them in their written submission dtd and requested to decide the case on its basis. DISCUSSIONS AND FINDINGS: 23. I have carefully gone through the case records and both written and oral submissions made by the assessee in their defense. From the facts of the case on records, I find that the basic issue to be dealt with in the impugned show cause notice pertains to admissibility of Cenvat credit taken and utilized by the said assessee on service tax paid on commission paid to their agents for sale of their finished goods. 24. I further find that as per the show cause notice, the said assessee has availed Cenvat credit of service tax paid on commission paid to their sales commission agent to

10 the tune of Rs. 12,18,009/- during the period from August, 2011 to March, The said Cenvat credit is alleged to have been wrongly availed by the said assessee mainly on the ground that the service provided by their commission agent does not fall within the ambit of definition of "input service" as provided under Rule 2(0 of the CCR, 2004 here-in-after referred to as CCR, 2004). As such, the said assessee is not entitled to the Cenvat credit of service tax paid on such service provided by the commission agent for sale of their finished goods. 25. I note that the services of a commission agent would fall within the ambit of sales promotion as envisaged in clause (i) of section 65(19) of the Finance Act, 1994, whereas according to the appellant a commission agent is a person who is directly concerned with the sale or purchase of goods and is not connected with the sales promotion thereof. Under the circumstances, the question that arises for consideration is as to whether services rendered by a commission agent can be said fall within the ambit of expression 'sales promotion'. It would, therefore, be necessary to understand the meaning of the expression sales promotion. 26. I also find that the above view is confirmed by the Hon'ble High Court of Gujarat in case of Commissioner of Central Excise, Ahmedabad-II V/s. M/s. Cadila Health Care Ltd., 2013 TIOL-12-HC-AHM-ST, which, while dealing with the issue of admissibility of service tax paid on commission paid to overseas agents as Cenvat credit, has observed as under: "(vii) The expression 'sales promotion' has been defined in the Oxford Dictionary of Business to mean an activity designed to boost the sales of a product or service. It may include an advertising campaign, increased PR activity, a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telephone selling, personal letters etc. In the Oxford Dictionary of Business English, sales promotion has been defined as a group of activities that are intended to improve sales, sometimes including advertising, organizing competitions, providing free gifts and samples. These promotions may form part of a wider sales campaign. Sales promotion has also been defined as stimulation of sales achieved through contests, demonstrations, discounts, exhibitions or tradeshows, games, giveaways, point-of-sale displays and merchandising, special offers, and similar activities. The Advanced Law Lexicon by P. Ramanatha Aiyar, third edition, describes the term sales promotion as use of incentives to get people to buy a product or a sales drive. In the case of Commissioner of Income-tax v. Mohd. Ishaque Gulam, 232 ITR 869, a Division Bench of the Madhya Pradesh High Court drew a distinction between the expenditure made for sales promotion and commission paid to agents. It was held that commission paid to the agents cannot be termed as expenditure on sales promotion.

11 9 (viii) From the definition of sales promotion, it is apparent that in case of sales promotion a large population of consumers is targeted. Such activities relate to promotion of sales in general to the consumers at large and are more in the nature of the activities referred to in the preceding paragraph. Commission agent has been defined under the explanation to business auxiliary service and insofar as the same is relevant for the present purpose means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration. Thus, the commission agent merely acts as an agent of the principal for sale of goods and such sales are directly made by the commission agent to the consumer. In the present case, it is the case of the assessee that service tax had been paid on commission paid to the commission agent for sale of final product. However, there is nothing to indicate that such commission agents were actually involved in any sales promotion activities as envisaged under the said expression. The term input service as defined in the rules means any service used by a provider of taxable service for providing an output service or used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal and includes services used in relation to various activities of the description provided therein including advertisement or sales promotion. Thus, the portion of the definition of input service insofar as the same is relevant for the present purpose refers to any service used by the manufacturer directly or indirectly in relation to the manufacture of final products and clearance of final products from the place of removal. Obviously, commission paid to the various agents would not be covered in this expression since it cannot be stated to be a service used directly or indirectly in or in relation to the manufacture of final products or clearance of final products from the place of removal. The included portion of the definition refers to advertisement or sales promotion. It was in this background that this court has examined whether the services of foreign agent availed by the assessee can be stated to services used as sales promotion. In the absence of any material on record, as noted above to indicate that such commission agents were involved in the activity of sales promotion as explained in the earlier portion of the judgement, in the opinion of this court, the claim of the assessee was rightly rejected by the Tribunal. Under the circumstances, the adjudicating authority was justified in holding that the commission agent is directly concerned with the sales rather than sales promotion and as such the services provided by such commission agent would not fall within the purview of the main or inclusive part of the definition of input service as laid down in rule 2(0 of the Rules. 27. Thus in light of the above decision of Hon'ble High Court, I have no hesitation to hold that the said assessee is not eligible for Cenvat credit of service tax paid on commission paid to the sales agents. 28. Now I take up the allegation made in the show cause notice that the noticee had availed and utilised the cenvat credit wrongly by suppressing the facts or willful misstatement or ill-intention on part of the assessee and as such the ingredients of

12 10 section 11A of CEA'1944 enabling invocation of extended period were present in this case. In the instant case, as discussed in foregoing paras, the credit taken in respect of services availed appeared to be inadmissible in as much as the same does not fall within the ambit of the definition of 'input services' as specified under Rule 2(0 of the Cenvat Credit Rules, In the instant case, the said assessee knew that the services in respect of which they had taken Cenvat Credit were the services related to sales and which did not have any relation whatsoever in or in relation to manufacture of goods. Further, the services provided by commission agent have been held to be concerned with sales and not sales promotion by the Hon'ble High Court of Gujarat in the case of CCE, Ahmedabad-II v/s. M/s Cadila Healthcare Limited, 2013, TIOL-12-HC- AHM-ST dated & Further, Hon'ble CESTAT, Ahmedabad, in the case of Commissioner of Customs & Central Excise, Surat-II Vs. Astik Dyestuff P. Ltd., vide order No. A/10339NVZB/AHD/2013 dated has held that "the law laid down by Hon'ble High Court of Gujarat in the case of Cadila Healthcare (Supra) is squarely applicable to the facts of the present case. No distinction can be made between the commission paid to local agents and the agents operating within the territory of India because natures of services provided by both the categories of the agents are same. Consequently, Cenvat Credit would not be admissible in respect of commission paid to local sales (Commission) Agents". Also Rule 2 (I) of Cenvat Credit Rules, 2004 defining what constitutes input services, does not include Services related with sales in the definition of Input Services. 29. Further, the said assessee, in this era of self assessment when onus of taking legitimate Cenvat credit has been passed on to the assessee, took Cenvat credit in violation of Cenvat Credit Rules. The said assessee, though, it has been expressly provided in rule 9(6) of Cenvat Credit Rules, 2004 that "... burden of proof regarding the admissibility of the Cenvat credit shall lie upon the manufacturer..." took credit of service tax paid on commission paid to local commission agents which does not qualify to be included as "input service" defined under Rule 2(0 of Cenvat Credit Rules, Thus, I find that the said assessee have contravened the provisions of the Cenvat Credit Rules, 2004 by suppressing the facts with intent to evade payment of duty in as much as (i) the assessee has taken the Cenvat Credit on the service despite knowing that the same did not qualify as 'input services' (ii) the service has not been used in or in relation to the manufacture of final products and services were related to sales and not sales promotion and as such would not fall within the ambit of the definition of 'input service' (iii) by failing to discharge the obligation cast on them under Rule 9(6) of the Cenvat Credit Rules, 2004 and (iv) by not informing the department about the availment of credit of services tax paid on commission paid to foreign commission agents. Therefore, the said Cenvat Credit amounting to Rs. 12,18,009/-(Rupees Twelve Lakhs Eighteen Thousand Nine Only) has been wrongly taken and utilized for the payment of duties of excise which resulted in revenue loss to the Government during the period (from August, 2011) to (upto March, 2013) and the

13 It same is required to be recovered by invoking provisions of extended period of five years contained in section 11A (5) of the Central Excise Act,1944. Accordingly, I hold that extended period has been rightly invoked in this case. 30. I further find that provisions of Rule 14 of the CCR, 2004 (as applicable during the period in question) clearly provides that where the Cenvat credit has been taken and utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of output service and the provisions of section 11A and 11AA of the CEA, 1944 shall apply mutatis mutandis for effecting such recoveries. Thus, the wrongly availed Cenvat credit is required to be recovered from said assessee along with interest in terms of provisions of Rule 14 of CCR, read with Section 11A and Section 11AA ibid. 31. Now I take up the issue of proposal of imposition of penalty in the impugned show cause notice under Rule 15 (2) of CCR, 2004 read with Section 11 AC (b) ibid as applicable during the period from (from August, 2011) to March, I find that the said assessee took Cenvat credit in violation of Cenvat Credit Rules. The said assessee, though, it has been expressly provided in rule 9(6) of Cenvat Credit Rules, 2004 that "... burden of proof regarding the admissibility of the Cenvat credit shall lie upon the manufacturer..." took credit of service tax paid on commission paid to local commission agents which does not qualify to be included as "input service" defined under Rule 2(/) of Cenvat Credit Rules, Thus, the said assessee have contravened the provisions of the Cenvat Credit Rules, 2004 by suppressing the facts with intent to evade payment of duty in as much as (i) the assessee has taken the Cenvat Credit on the service despite knowing that the same did not qualify as 'input services' (U) the service has not been used in or in relation to the manufacture of final products and services were related to sales and not sales promotion and as such would not fall within the ambit of the definition of 'input service' (iii) by failing to discharge the obligation cast on them under Rule 9(6) of the Cenvat Credit Rules, 2004 and (iv) by not informing the department about the availment of credit of services tax paid on commission paid to local commission agents. I find that once the charges of suppression of facts have been proved, the penal provisions under said Rule 15(2) read with Section 11AC ibid have to be invoked in this case. 32. Thus, in light of the above, I hold that the CENVAT credit totally amounting to Rs. 12,18,009/- was wrongly availed by the assessee on the above mentioned Service during the period from (from August, 2011) to March, 2013 and the same is required to be disallowed and recovered from them in terms of the provisions of Rule 14 of the CCR, 2004 read with Section 11 A of the Central Excise Act, Further interest is also required to be charged on the Credit wrongly availed and recovered from them in terms of the provisions of Rule 14 of the CCR, 2004 read with Section 11AA of the Central Excise Act, The said assessee is also liable to penalty under Rule 15(2) of the CCR, 2004 for their contraventions as discussed above. 33. In view of my above findings, I pass the following order in the matter:

14 12 (i) ORDER I disallow the CENVAT Credit amounting to Rs. 12,18,009/- (Rupees Twelve Lakh Eighteen Thousand Nine only) for the period from to March, 2013 and order to be recovered from M/s. Nu-Vu Conair Pvt Ltd, Plot No.147 & 148, Devraj Industrial Park, Piplaj-Pirana Road, Piplaj, Ahmedabad in terms (ii) of the provisions of Rule 14 of CCR, 2004 read with Section 11A of Central Excise Act, I order to recover interest at the prescribed rates from M/s. Nu-Vu Conair Pvt Ltd, Plot No.147 & 148, Devraj Industrial Park, Piplaj-Pirana Road, Piplaj, Ahmedabad on the said wrongly availed Cenvat credit in terms of the (iii) provisions of Rule 14 of CCR, 2004 read with Section 11AA of the Central Excise Act, I impose penalty of Rs. 6,09,005/- (Rupees Six Lakh Nine Thousand and Five only) upon M/s. Nu-Vu Conair Pvt Ltd, Plot No.147 & 148, Devraj Industrial Park, Piplaj-Pirana Road, Piplaj, Ahmedabad under the provision of Rule 15(2) of the CENVAT Rules, 2004 read with provisions of Section 11AC of the Central Excise Act, The amount of penalty will be 25% of the penalty imposed in case the amount of penalty is paid within thirty days from the date of communication of this order along with disallowed cenvat credit and interest payable thereon under Section 11 AA of the Central Excise Act, The Show Cause Notice issued to M/s. Nu-Vu Conair Pvt Ltd, Plot No.147 & 148, Devraj Industrial Park, Piplaj-Pirana Road, Piplaj, Ahmedabad vide F.No. V.84/15-16/Nu-Vu/ADC/0A-1/2014 dated 14/03/2014 stands disposed of in above manner. Encl.: Annexure-A and documents listed at Sr. No.2 of the Annexure-A F. No.: V.84/15-16/Nu-Vu/ADC/0A-1/2014 By Reg. Post AD/Hand Delivery To, i6 (Anil Misra) Additional Commissioner, Central Excise, Ahmedabad l. date:1( M/s. Nu-Vu Conair Pvt. Ltd., 147 & 148, Devraj Industrial Park, Piplaj-Pirana Road, Piplaj, Ahmedabad Copy to:- 1. The Commissioner, Central Excise, Ahmedabad-I 2. The Assistant Commissioner, Central Excise, Division-IV, A'bad-I 3., The Superintendent, Central Excise, AR-Ill, Division-IV, Ahmedabad-I The Superintendent (Systems), Central Excise, Ahmedabad-I 5. The Ass/Dy.Commissioner (Tar), Central Excise, A'bad-I 6. The Ass/ Dy. Commissioner (RRA), Central Excise, A'bad-I 7. Guard File.