COMMISSIONER OF CENTRAL GOODS & SERVICE TAX,COIMBATORE vs Lux Industries Limited

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH – COURT No. I

Excise Appeal No. 42394 of 2018
(Arising out of Order-in-Appeal No. CMB-CEX-000-APP-175/2018 dated 20.07.2018 passed
by the Commissioner of GST and Central Excise (Appeals), No. 6/7, A.T.D. Street, Race
Course Road, Coimbatore – 641 018)

Principle Commissioner of GST and Central Excise ...Appellant
Coimbatore Commissionerate,
No. 6/7, A.T.D. Street,
Race Course Road,
Coimbatore – 641 018.
Versus
M/s. Lux Industries Limited ...Respondent
JM Hosiery Division,
No. 11/5, Shastri Nagar,
Angeripalayam Main Road,
Tirupur – 641 602.

APPEARANCE:

For the Appellant : Mr. M. Selvakumar, Authorised Representative
For the Respondent : Mr. M. Karthikeyan, Advocate

CORAM:
HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)

FINAL ORDER No. 41177 / 2026

DATE OF HEARING : 22.09.2026
DATE OF DECISION : 11.11.2026

Per Mr. VASA SESHAGIRI RAO

The Revenue is in appeal against Order-in-Appeal No.
CMB-CEX-000-APP-175-18 dated 20.07.2018, by which the
Commissioner (Appeals) set aside Order-in-Original No.
04/2018-C.Ex.(JC) dated 16.03.2018 and allowed CENVAT

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credit of Rs. 1,58,15,615/- taken by the Respondent for the
period March 2011 to February 2013 on Service Tax paid on
broadcasting services.

2. Brief facts of the case are that the Respondent
manufactures hosiery garments under the brand "LUX". For
television advertisement of its products it engaged M/s.
Prachar Communications Ltd., Mumbai ("Prachar"), which
booked air time with M/s. Zee Entertainment Enterprises
Ltd., M/s. Sony Entertainment Television and other channels.
The channels billed Prachar and paid Service Tax on the
broadcasting charges. Prachar in turn raised invoices on the
Respondent showing (i) the broadcasting charges and the
Service Tax thereon as reimbursement, and (ii) its own
agency commission with Service Tax thereon. The
Respondent took credit of the Service Tax on both
components.

3. On audit, the Department took the view that the
Respondent could take credit only of the Service Tax on
Prachar's commission and not of the Service Tax on
broadcasting charges, since the channels had billed Prachar
and not the Respondent. Show Cause Notice No. 06/2016-
COMMR dated 15.03.2016 proposed denial of Cenvat credit
of Rs.1,58,15,615/- invoking the extended period, with

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interest and penalty under Section 11AC of the Central
Excise Act, 1944 read with Rule 15(2) of the CENVAT Credit
Rules, 2004 ("CCR"). The adjudicating authority confirmed
the proposals.

4. The Commissioner (Appeals) allowed the
Respondent's appeal. The findings are that (i) Prachar's
consolidated invoices disclose the Service Tax paid by the
channels and by Prachar, with the other requisite particulars;
(ii) the channels' invoices name the Respondent as the
advertiser and Prachar acted only as a pure agent; (iii)
payment of Service Tax, receipt of the service, its use in
relation to the manufacture of the Respondent's goods, and
ownership of the brand "LUX" are all undisputed; and (iv)
any deficiency in the documents is covered by Rule 9(2) of
the CCR. Reliance was placed on Indian Oil Corporation Ltd.
v. CCE, Mumbai-II, 2014 (36) S.T.R. 833 (Tri.-Mum.) and
Zapak Digital Entertainment Ltd. v. CST, Mumbai-II, 2017
(49) S.T.R. 455 (Tri.-Mum.).

5. Aggrieved by the order of the first appellate
authority, the revenue filed the subject appeal. The Ld.
Authorized Representative Mr. M. Selvakumar for the
Revenue has argued reiterating the grounds of appeal filed.
He has contended that the broadcasting service was received

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by Prachar and not by the Respondent, since the channels
invoiced Prachar alone, that it was therefore an input service
of Prachar, on which only Prachar could take credit, and that
Prachar paid Service Tax only on its commission and not on a
value inclusive of the broadcasting charges. On that footing
it is contended that the broadcasting service is not an input
service in the hands of the Respondent under Rule 2(1) of
the CCR; that there is a contravention of Rules 3 and 9 of
the CCR and Rule 4A of the Service Tax Rules, 1994; and
that Rule 9(2) cannot be invoked to condone credit taken on
invoices not issued by the service provider. It is further
contended that the order of the Commissioner (Appeals) is
not legal and proper since the Department had appealed
against the decision in Zapak Digital Entertainment before
the Hon'ble High Court of Bombay, relying on Union of India
v. West Coast Paper Mills Ltd., 2004 (164) E.L.T. 375 (S.C.).

6. The Ld. Advocate Shri M. Karthikeyan for the
Respondent submitted that the appeal does not survive on
its own record. The Committee of Commissioners accepted
the Order-in-Appeal on merits; the appeal was authorized
only because the Department had appealed against Zapak
Digital Entertainment; that appeal has since been dismissed
by the Hon'ble High Court of Bombay; the other decision
relied on by the Commissioner (Appeals), Indian Oil

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Corporation, was never challenged; and both decisions have
since been followed by this Tribunal, including by this Bench.
On merits, he submitted that the Department allowed credit
of the Service Tax on Prachar's commission, which is the
consideration for procuring the broadcasting service for the
Respondent, and cannot therefore contend that the
Respondent did not receive the very service so procured.
Referring to paragraph 3.0 of the written synopsis, he
submitted that the engagement of Prachar, the broadcast of
the Respondent's products, the payment by the Respondent
of the broadcasting charges with the tax thereon through
Prachar, and the receipt and use of the service are all
undisputed; the Department's objection rests only on the
channels' invoices being addressed to Prachar. He relied on
Shivraj Cable Network v. CCE, Raigad, and on Power Soap
Ltd., in which the Revenue's appeal on the identical issue
was dismissed by the Hon'ble High Court of Madras.

7. We have heard both sides and perused the
appeal records.

8. The review order, C. No. IV/16/765/2018-CZO-
CE-REVIEW, passed by the Principal Chief Commissioner of
GST & Central Excise, Chennai Zone (page 11 of the appeal
paper book), is an order on a reference under the proviso to

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Section 35B(2) of the Central Excise Act, 1944. The
Committee of Commissioners comprised the Principal
Commissioner, Coimbatore and the Commissioner, Madurai.
The point of difference referred, as recorded in paragraph 1
of the review order, reads: -
"On merits of the issue, it was proposed for acceptance.
But it is opined by Commissioner, Madurai that an appeal
has to be preferred as an appeal was preferred by the
Department in one of the relied upon cases, to keep the
issue alive and as a matter of judicial discipline."

9. The record is therefore clear. Both members of
the Committee were agreed that, on merits, the Order-in-
Appeal deserved acceptance. The only difference was
whether an appeal should nonetheless be filed because the
Department had appealed against one of the two decisions
relied upon by the Commissioner (Appeals). That is also the
only reason which the review order adds to the grounds
already set out in the show cause notice and the Order-in-
Original (paragraph 5.1.5 of the review order, reproduced as
ground 5 of the appeal). The appeal was thus authorised to
"keep the issue alive" pending the decision of the Hon'ble
High Court of Bombay, and not because the Committee
doubted the correctness of the order on merits. We do not
consider it necessary to examine the extent of the power of
the Principal Chief Commissioner on such a reference. It is
enough that the foundation on which the appeal was
authorised no longer exists.

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10. The Department's appeal against Zapak Digital
Entertainment Ltd. before the Hon'ble High Court of Bombay
has since been dismissed as reported in 2018 (18) GSTL 583
(Bom). The decision of the Tribunal in Zapak Digital
Entertainment has therefore attained finality, and the
reliance on West Coast Paper Mills, which turns on a lis being
kept alive in a pending appeal, is no longer available to the
Revenue.

11. Secondly, the Commissioner (Appeals) relied
independently on Indian Oil Corporation Ltd. The review
order is silent on that decision, and it is not the Revenue's
case that it was challenged. In that case the Tribunal allowed
credit of Service Tax on broadcasting charges where the
advertisement was broadcast on behalf of the assessee, the
bills named the assessee as advertiser, and the assessee
bore the incidence of tax. The Order-in-Appeal records the
same facts here, and the review order does not dispute
them. That decision, standing unchallenged, is by itself
sufficient to sustain the Order-in-Appeal.

12. Thirdly, both decisions have since been followed
by this Tribunal. In Kellogg India Pvt Ltd v. Commissioner,
2022 (9) TMI 1280-CESTAT Mumbai , the Tribunal,

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considering broadcasting services procured through an
advertising agency, followed Zapak Digital Entertainment
and Indian Oil Corporation and allowed the credit. This
Bench, in Power Soap Ltd. as reported in 2018 (7) TMI 254
CESTAT Chennai , following Indian Oil Corporation among
other decisions, allowed credit of Service Tax on
broadcasting services where the invoices carried the name of
the advertising agency as well as that of the assessee and its
product, the tax had been paid and the service availed. It
held that the advertising agency being only an intermediary
was no ground to deny credit, and that any discrepancy in
the documents was a matter for verification under the
proviso to Rule 9(2). The Revenue appealed to the Hon'ble
High Court of Madras on two questions: whether credit was
admissible on broadcasting services routed through an
advertising agency acting as an intermediary, and whether
the Tribunal had ignored Rule 9 of the CCR. Those are the
very contentions urged before us. The Hon'ble High Court
held that no substantial question of law arose and dismissed
the appeal: Commissioner of GST and Central Excise v.
Power Soap Ltd., C.M.A. No. 3137 of 2018, judgment dated
03.01.2019 . The jurisdictional High Court has thus declined
to interfere on the identical question.

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13. Though the appeal fails for the reasons above,
we have also examined the Revenue's contention on merits,
since it is the only contention urged throughout these
proceedings: that the broadcasting service was an input
service of Prachar and not of the Respondent, because the
channels invoiced Prachar.

14. The contention does not survive the facts on
which the Revenue itself relies. It is the Revenue's own case
that Prachar paid Service Tax only on its commission and not
on a value inclusive of the broadcasting charges, and Prachar
did not take credit of the Service Tax charged by the
channels. Prachar thus neither used the broadcasting service
in providing any taxable output service of its own nor
claimed it as an input service. The broadcasting charges and
the tax thereon passed through Prachar to the Respondent
as a reimbursement. That is not a device of the parties.
Under the Board's Circular F.No. 341/43/96-TRU dated
31.10.1996, extracted in Indian Oil Corporation, the amount
paid by an advertising agency for space and time in the
electronic media, excluding its own commission, is not
includible in the value of its taxable service. Prachar could
not, therefore, have paid tax on the broadcasting charges as
part of its own output. The only way the tax charged by the
channels could reach the advertiser was as a reimbursement

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shown in the agency's invoice. That is what Prachar's
invoices did, and it is the prevalent practice in the trade. A
service on which the intermediary neither paid tax as part of
its output nor took credit as an input cannot be treated as
the intermediary's input service merely because the
channel's invoice was addressed to it.

15. The advertisements were of the Respondent's
"LUX" products. The Respondent commissioned them, paid
for their broadcast including the Service Tax charged by the
channels, and used the service in relation to the manufacture
and clearance of its goods. The Service Tax charged by the
channels was collected from the Respondent through Prachar
and borne by it. None of this is disputed; the Revenue's
objection rests solely on the addressee of the channels'
invoices. The service was received by the manufacturer
within the meaning of Rule 3 of the CCR, and advertisement
falls expressly within the inclusive limb of "input service"
under Rule 2(1).

16. The Revenue's position is also internally
inconsistent. It has allowed credit of the Service Tax on
Prachar's commission on the very same invoices. That
commission is the consideration for procuring air time from
the channels for the Respondent; it has no content apart

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from the broadcasting it procures. Having accepted that the
Respondent received the agency service of procuring the
broadcast, the Revenue cannot contend that the Respondent
did not receive the broadcast so procured. Both components
arise from a single transaction. One cannot be accepted as
an input service of the Respondent while the other is treated
as an input service of Prachar.

17. Prachar's invoices disclose the Service Tax paid
by the channels, the description and value of the service and
the particulars of the parties, which is what Rule 9(2)
requires, and the Commissioner (Appeals) was right in
applying it. Credit cannot be denied for a deficiency in the
document when payment of tax, receipt of the service and
its use are not in dispute: In the case of Shivraj Cable
Network v. CCE, Raigad, 2015 (39) S.T.R. 670 (Tri.-Mum.)
credit was allowed under the proviso to Rule 9(2) on invoices
that named a different person, because the records
established that the service was received, paid for and
accounted for by the assessee. The present case is stronger:
the channels' invoices name the Respondent as the
advertiser, and Prachar's invoices are raised on the
Respondent. Nor is there any risk of the same credit being
taken twice, since Prachar has not taken it.

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18. In view of the above, the appeal of the Revenue
fails both on its own record and on merits: the Committee of
Commissioners accepted the order on merits; the only
reason for filing the appeal ceased to exist with the dismissal
of the Department's appeal in Zapak Digital Entertainment;
the independent basis of Indian Oil Corporation was never
challenged; both decisions have been consistently followed;
the identical contentions were rejected by this Bench in
Power Soap, and the Revenue's appeal against that order
was dismissed by the jurisdictional High Court; and the
broadcasting service was received and used by the
Respondent, as the Revenue's own acceptance of credit on
the commission confirms. Having so held, we do not find it
necessary to examine the Respondent's plea on limitation

19. The appeal filed by the Revenue is dismissed and
the Order-in-Appeal No. CMB- CEX-000-APP-175-18 dated
20.07.2018 is upheld. The Respondent is entitled to
consequential relief, if any, in accordance with law.
(Order pronounced in open court on 11.11.2026)



Sd/- Sd/-
(AJAYAN T.V.) (VASA SESHAGIRI RAO)
MEMBER (JUDICIAL) MEMBER (TECHNICAL)

MK