Cenvat Credit is admissible on sales promotion which includes services by way of sale of dutiable goods on commission basis .
The notification no. 02/2016-C.E(N.T) inserts an explanation in clause (l), after sub-clause (C) of Rule 2 of Cenvat Credit Rules,2004. The Explanation is reproduced herein below :
For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.”
On perusal of the same , it could be understood that it says that sales promotion includes services by way of sale of dutiable goods on commission basis .
In otherwords ,it means that such services were already included in it but now it is categorically clarified by an explanation that sales promotion also includes sales commission .
Whereas, it is pertinent to note that It is well settled in law that explanations which are clarificatory in nature i.e which clarifies an existing situation are always retrospective in nature . Hence, it will be applicable on all the pending cases even lying before HC’s or SC of India .
Further , the purpose of inserting an explanation in rules, acts and /or regulations is to end the anamolies existing in the public and trade . Therefore, its full effect has to be given by retrospective application.