2026-VIL-1886-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Eligibility to CENVAT Credit on Service Tax paid on broadcasting services - Rules 2(1), 3 and 9(2) of the CENVAT Credit Rules, 2004 - The Respondent, a manufacturer, engaged an advertising agency for television advertisement of its products. The agency booked air time with broadcasting channels, which billed the agency and paid Service Tax on the broadcasting charges. The agency raised invoices on the Respondent showing the broadcasting charges and the Service Tax thereon as reimbursement, along with its own commission. The Department denied credit of the Service Tax on broadcasting charges by SCN, since the channels had billed the agency and not the Respondent. The FAA allowed the credit. The Appellant (Revenue) contended that the broadcasting service was an input service of the agency and not of the Respondent under Rule 2(1). It further contended that Rule 9(2) cannot condone credit taken on invoices not issued by the service provider - Whether the Respondent is eligible to CENVAT credit of Service Tax paid on broadcasting services where the channels' invoices were addressed to the advertising agency - HELD - The appeal fails on its own record. Both members of the Committee of Commissioners agreed that the Order-in-Appeal deserved acceptance on merits, and the appeal was authorised only to keep the issue alive pending the decision in one of the cases relied upon by the FAA. That decision has since attained finality, so the foundation of the appeal no longer exists. The other decision relied upon by the FAA was never challenged and is by itself sufficient to sustain the Order-in-Appeal. On merits, the Revenue's own case is that the agency paid Service Tax only on its commission and did not take credit of the Service Tax charged by the channels. The agency therefore neither used the broadcasting service for any taxable output service of its own nor claimed it as an input service. 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. The only way the tax charged by the channels could reach the advertiser was as a reimbursement shown in the agency's invoice. A service on which the intermediary neither paid tax as part of its output nor took credit as an input cannot be treated as its input service merely because the channel's invoice was addressed to it. The Respondent commissioned the advertisements of its products, bore the Service Tax and used the service in relation to the manufacture of its goods. The service was therefore received by the manufacturer within the meaning of Rule 3, and advertisement falls expressly within the inclusive limb of input service under Rule 2(1). The Revenue's position is also inconsistent, since it allowed credit of the Service Tax on the agency's commission on the very same invoices. Having accepted that the Respondent received the agency service of procuring air time, the Revenue cannot contend that the Respondent did not receive the broadcast so procured. The invoices disclose the Service Tax paid by the channels, the description and value of the service and the particulars of the parties, as Rule 9(2) requires. 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 - The appeal filed by the Revenue is dismissed and the Order-in-Appeal allowing the CENVAT credit is upheld
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