Commission-agent services for sales through depots qualify as input services for CENVAT credit.

The appellant availed CENVAT credit of service tax distributed by its head office as an Input Service Distributor (ISD). The tax related to commission paid to agents for services connected with sales from the appellant’s depots, including procuring orders, arranging dispatches and collecting payments.

The Department disallowed credit of ₹49,97,802, with interest and an equal penalty, on the ground that commission-agent services were not input services. The Commissioner (Appeals) upheld the disallowance, and the appellant appealed to the Tribunal.

The appellant maintained that the depots were places of removal and that the services related to sales up to those places.

Whether service tax paid on commission-agent services connected with sales of the appellant’s goods through its depots qualified as creditable “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004.

Whether the head office could distribute that credit to the appellant through ISD invoices, and whether the disallowance, interest and penalty were sustainable.

Rule 2(l) of the CENVAT Credit Rules, 2004, as quoted by the Tribunal, covers services used directly or indirectly in or in relation to manufacture and clearance of final products up to the place of removal, as well as specified business-related services.

Section 4(3)(c) of the Central Excise Act, 1944 identifies a depot as a place of removal.

The appellant also relied on Commissioner of C. Ex., Ahmedabad-II v. Cadila Healthcare Ltd., 2013 (30) S.T.R. 3 (Guj.), in support of credit for commission-agent services connected with depot sales.

The Tribunal found that the agents’ services—including procuring orders, arranging dispatch and collecting payments—were connected with the sale of goods manufactured by the appellant through its depots.

Treating the depots as places of removal under Section 4(3)(c), it concluded that the commission related to sales up to the place of removal and therefore qualified as input service under Rule 2(l).

Since the head office had distributed the related credit through ISD invoices, the Tribunal found no infirmity in the appellant’s availment of that credit.

It set aside the impugned order, including the disallowance, interest and penalty, and allowed the appeal with consequential relief, if any, in accordance with law.