The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Del Credere Agent services being post-sale services cannot be termed as “input services” and therefore, CENVAT Credit is not allowable on the same.
Appellants are manufacturer of excisable goods and are availing cenvat credit of the duty paid by them on inputs, capital goods and input service as per Cenvat Credit Rules, 2004.The department noted that the appellants had availed credit of service tax paid on sales commission paid to one M/s. Supreme Packaging with whom they had entered into an agreement to appoint them as ‘Del Credere Agent’ for effective proper guarantee of solvency of customers and effective recovery of money.
Mr. Sanjiv Srivastava, Member (Technical) referred the decision of in the case of Technova Imaging Systems Pvt. Ltd, wherein it was held thatdisputed insurance service was availed by the appellants in relation with post-sale activities cannot be deemed as “input services” and therefore, CENVAT Credit cannot be allowed.
Dismissing the appeal filed by the assessee, the Tribunal observed that “On merits I find that the issue is in respect of admissibility of CENVAT Credit in respect of “Del Credere Agent Services”, received by Appellants. They had appointed M/s. Supreme Packaging as “Del Credere Agent”, to guarantee the solvency of their customer and ensure speedy recovery of the amounts due from them. These service are in relation to the activities which are post sale and clearance of goods and hence these cannot be treated as input services for the manufacture of goods cleared by the appellants from their factory. The issue is squarely covered by the decision referred to by learned AR in the favour of revenue.”
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