Appeal Filed Only to 'Keep the Issue Alive' Fails: CESTAT Chennai Upholds ₹1.58 Crore CENVAT Credit to Lux Industries on TV Broadcasting Charges Billed Through Ad Agency

The Revenue appealed against an order allowing Lux Industries CENVAT credit of ₹1,58,15,615 (March 2011–February 2013) on service tax paid on TV broadcasting charges. The channels had billed the advertising agency, Prachar, which passed the charges and tax on to Lux as reimbursements (Paras 1–4). The Tribunal found that the Committee of Commissioners had accepted the Order-in-Appeal on merits and authorised the appeal only to keep the issue alive while the Department's appeal in Zapak Digital Entertainment was pending (Paras 8–9). That appeal was later dismissed by the Bombay High Court, the separate basis of Indian Oil Corporation was never challenged, and the Madras High Court had dismissed the Revenue's appeal on the identical issue in Power Soap (Paras 10–12). On merits, the agency neither paid tax on the broadcasting charges nor took credit, so the service could not be its input; Lux received and used it, and Rule 9(2) covers the documents (Paras 13–17). The Revenue's appeal was dismissed (Paras 18–19).

Key Proposition: Service tax charged by TV channels on broadcasting an advertiser's commercials is CENVAT credit of the advertiser even though the channels invoiced the advertising agency, where the agency only passed the charges and tax through as reimbursement; and a Revenue appeal authorised solely to 'keep the issue alive' pending another case cannot survive once that case is decided against the Revenue.

A. Background / Synopsis :

• The respondent manufactures hosiery garments under the brand 'LUX' and engaged M/s. Prachar Communications Ltd., Mumbai to book TV air time with Zee, Sony and other channels. (Para 2)
• The channels billed Prachar and paid service tax; Prachar's invoices on the respondent showed the broadcasting charges and tax as reimbursement, plus its own commission with tax. The respondent took credit on both. (Para 2)
• Show Cause Notice dated 15.03.2016 proposed denial of credit of ₹1,58,15,615 on the broadcasting component, invoking the extended period; the adjudicating authority confirmed it, but the Commissioner (Appeals) allowed the respondent's appeal on 20.07.2018. (Paras 1, 3–4)
• The Revenue's appeal was heard on 22.09.2026 and decided on 11.11.2026.

B. Issues For Consideration :

• Whether the Revenue's appeal survives when it was authorised only to keep the issue alive pending the Department's appeal in Zapak Digital Entertainment. (Paras 8–12)
• Whether service tax on broadcasting charges invoiced to the advertising agency is admissible as CENVAT credit of the advertiser. (Para 13)

C. Submissions Of Parties :

• Appellant (Revenue):

The broadcasting service was received by Prachar, since the channels invoiced Prachar alone; it was Prachar's input service and Prachar paid tax only on its commission. (Para 5)

Rules 3 and 9 of the CCR and Rule 4A of the Service Tax Rules were contravened, and Rule 9(2) cannot condone credit on invoices not issued by the service provider. (Para 5)

The Order-in-Appeal was not proper because the Department had appealed against Zapak Digital Entertainment (relying on Union of India v. West Coast Paper Mills). (Para 5)

• Respondent (Assessee):

The Committee of Commissioners accepted the Order-in-Appeal on merits; the Zapak appeal has since been dismissed, and Indian Oil Corporation was never challenged. (Para 6)

Having allowed credit on Prachar's commission for procuring the broadcasting, the Department cannot say the respondent did not receive that service; reliance on Shivraj Cable Network and Power Soap. (Para 6)

D. Court's Observations & Analysis :

• Re: Issue (i): The appeal fails on its own record

The review order shows both Committee members agreed the Order-in-Appeal deserved acceptance on merits; the appeal was filed only to keep the issue alive as a matter of judicial discipline. (Paras 8–9)

The Department's appeal in Zapak Digital Entertainment was dismissed by the Bombay High Court (2018 (18) GSTL 583 (Bom)), so West Coast Paper Mills no longer helps the Revenue. (Para 10)

Indian Oil Corporation, an independent basis of the Order-in-Appeal, stands unchallenged and is by itself sufficient to sustain it. (Para 11)

Both decisions were followed in Kellogg India and Power Soap; the Madras High Court dismissed the Revenue's appeal in Power Soap on the very same questions (C.M.A. No. 3137 of 2018, 03.01.2019). (Para 12)

• Re: Issue (ii): Merits

Prachar neither paid tax on the broadcasting charges as part of its output nor took credit on them; under Board Circular dated 31.10.1996, such charges are not part of an agency's taxable value, so reimbursement through the agency's invoice was the only way the tax could reach the advertiser. (Para 14)

Lux commissioned the advertisements of its own products, paid for the broadcast and the tax, and used the service in its manufacture; advertisement is expressly within 'input service' under Rule 2(l). (Para 15)

Allowing credit on the commission while denying it on the broadcast the commission procured is internally inconsistent. (Para 16)

Prachar's invoices carry the particulars Rule 9(2) requires, and there is no risk of double credit since Prachar did not take it (Shivraj Cable Network followed). (Para 17)

Held: the appeal fails on its own record and on merits; the plea on limitation need not be examined. (Para 18)

Notable Observations: “It is enough that the foundation on which the appeal was authorised no longer exists.” (Para 9); “Both components arise from a single transaction.” (Para 16)

E. Decision & Directions :

1. Revenue's appeal dismissed; Order-in-Appeal No. CMB-CEX-000-APP-175-18 dated 20.07.2018 upheld. (Para 19)

2. Respondent entitled to consequential relief, if any, in accordance with law. (Para 19)

Costs: Not stated in judgment.

Separate Opinions: None.

F. Legal Provisions Discussed & Precedents Cited :

• CENVAT Credit Rules, 2004 – Rules 2(l), 3, 9(2) and 15(2).
• Central Excise Act, 1944 – Section 11AC; Section 35B(2) proviso (review by Committee of Commissioners).
• Service Tax Rules, 1994 – Rule 4A.
• CBEC Circular F.No. 341/43/96-TRU dated 31.10.1996 – value of advertising agency's service excludes media charges.
• Zapak Digital Entertainment Ltd. v. CST, Mumbai-II, 2017 (49) S.T.R. 455 (Tri.-Mum.), Revenue's appeal dismissed in 2018 (18) GSTL 583 (Bom) – Followed.
• Indian Oil Corporation Ltd. v. CCE, Mumbai-II, 2014 (36) S.T.R. 833 (Tri.-Mum.) – Followed.
• Power Soap Ltd., 2018 (7) TMI 254 (CESTAT Chennai), Revenue's appeal dismissed in C.M.A. No. 3137 of 2018 (Mad.) dated 03.01.2019 – Followed.
• Kellogg India Pvt. Ltd. v. Commissioner, 2022 (9) TMI 1280 (CESTAT Mumbai) – Referred to.
• Shivraj Cable Network v. CCE, Raigad, 2015 (39) S.T.R. 670 (Tri.-Mum.) – Followed.
• Union of India v. West Coast Paper Mills Ltd., 2004 (164) E.L.T. 375 (S.C.) – Held no longer available to the Revenue.

G. Case Details :

• Case / Party Name: Principal Commissioner of GST and Central Excise, Coimbatore Commissionerate (Appellant) v. M/s. Lux Industries Limited, JM Hosiery Division, Tirupur (Respondent)
• Case Number(s): Excise Appeal No. 42394 of 2018; Final Order No. 41177/2026
• Coram / Judges: Hon'ble Mr. Vasa Seshagiri Rao, Member (Technical) and Hon'ble Mr. Ajayan T.V., Member (Judicial) – Division Bench; order by Mr. Vasa Seshagiri Rao
• Counsel Appearances: For the Appellant: Mr. M. Selvakumar, Authorised Representative. For the Respondent: Mr. M. Karthikeyan, Advocate.

Disclaimer: This summary is an editorial aid and does not form part of the judgment. Refer to the original judgment before citing.