2025-VIL-611-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Cenvat Credit, Place of Removal, Sales Commission, Rent – Denal of Cenvat credit on outward freight beyond place of removal, (commission on sales paid beyond the place of removal in respect of sales effected in show rooms and commercial rent paid to the premises of sales outlets - Whether the appellant is eligible to avail input service credit on outward freight from factory to sales outlets - HELD - In a case where the goods are cleared from the factory premises to the franchisee showrooms and the goods are sold to the customers from the franchisee showrooms, the franchisee showroom should be considered as the 'place of removal' as per the definition under Section 4(3)(c) of the Central Excise Act, 1944. Therefore, the Cenvat credit availed on the outward freight for transportation of goods from the factory to the franchisee showrooms is eligible - the appellant is eligible for Cenvat credit on outward transportation upto the place of removal, which is the sales outlets (franchisee stores), Cenvat credit on sales commission paid to the franchisees, and Cenvat credit on commercial rent paid for retail outlets or showrooms – The impugned order is set aside and the appeal is allowed - Whether the input credit availed by the appellant on sales commission paid to the franchisee for marketing and selling the products manufactured by the appellant is allowable - HELD - The services of sales commission paid to the franchisees for display and sale of the appellant's products is covered under the inclusive definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004 as it relates to the sales promotion activity. The Cenvat credit on sales commission paid to the franchisees is allowable - Whether the appellant is eligible to avail input service credit on service tax on rent paid for the retail outlets - HELD - Since the goods manufactured by the appellant were transferred from the factory premises to the franchisee showrooms, where from the goods were sold to the customers, the franchisee showroom is to be considered as the 'place of removal' - Accordingly, the Cenvat credit availed on the rent paid for the retail outlets/showrooms is eligible as the services have a nexus with the clearance of final products up to the place of removal.
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