We are an entity engaged in trading of iron/steel rolls in India. We also supply the goods to our group entities. We are considering the option of obtaining excise registration in order to pass on the credit of excise duty paid on purchase of excisable goods to our customers. Kindly advise if we can obtain excise registration for the same premises for which one of our group entities is already registered.
Excise registration is typically obtained in respect of a particular premise and not with respect to a particular person. Even if one person has more than one premise, he has to obtain different excise registrations in respect of each premise. Mumbai High Court in the case of Manibhadra Processors vs. Additional Commissioner of Central Excise held that a person holding earlier registration must surrender his registration certificate in respect of that premise for a new person to obtain registration in respect of the same premise.
Accordingly, in the present case, you would not be able to obtain excise registration for the same premise for which your group entity is already registered.
We are an entity engaged in production of garments which are sold to various customers in India as well as exported outside India. With respect to garments exported outside India, we pay commission to our overseas selling agents for their efforts in sale of such goods outside India. Further, we discharge the service tax liability on this commission paid under reverse charge mechanism and claim cenvat credit of such service tax. However, recently our service tax audit was conducted for FY 2006-07. During the audit, service tax authorities have asked us to reverse cenvat credit of service tax paid on overseas commission on the contention that such service is a post manufacturing activity. We wish to clarify if we are entitled to claim cenvat credit with respect to service tax paid on such overseas commission or not.
For the purpose of availment of cenvat credit on any input service used by the manufacturer, a service should qualify as ?input service? as defined under the Cenvat Credit Rules, 2004 (the ?Credit Rules?). The definition of ?input service? as provided under the Credit Rules during 2006-07 stipulates that services which are used in or in relation to the manufacturing activity whether directly or indirectly would qualify as input services. Further, the inclusive part of the definition covers services that are used in relation to the activities specified therein (for example,?advertisement, sales promotion etc). The inclusive part also covers any service which is used in relation to business of the manufacturer.
The Courts through various judicial pronouncements have given a wide connotation to the term ?activities relating to business such as? and that a wide range of business activities qualify under the definition of input service.
We understand that commission paid to the overseas agent is with respect to sale of goods which helps in increasing the sales revenue of your business. Accordingly, it is a service which can be said to be related to the business of an entity and should qualify as ?input service? under the Credit Rules.
Further, the Credit Rules do not put any restriction on availment of cenvat credit of services which are received post manufacturing. In fact, inclusive part of the definition of ?input services? specifically includes certain services such as advertisement, sales promotion which are in the nature of being post manufacturing activities only.
There are various judicial pronouncements which support the view that commission paid to overseas agents is an eligible input service for the purpose of availment of Cenvat credit. Hence, cenvat credit of service tax paid on overseas commission should be available.
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