2015 (6) TMI 988 - AT - Central Excise

Repair and maintenance - definition of input services - Held that - The issue is no more res integra and stands settled by the precedent decisions of the Tribunal. In the case of CCE Vadodara Vs Danke Products 2009 (7) TMI 137 - CESTAT, AHMEDABAD , it was held that repair and maintenance of the goods during the warranty period is an activity relating to sale of goods and such an activity would be covered by the definition of input services. To the same effect is another order of the Tribunal in the case of Gujarat Forging Ltd. Vs CCE 2014 (5) TMI 641 - CESTAT AHMEDABAD wherein it stands held that inasmuch as the cost of warranty period is already included in the assessable value of the final product, the maintenance and repair services provided during the warranty period would be included in the definition of input services. Inasmuch as the issue stands decided by the above referred decisions of the Tribunal, set aside the impugned order and allow the appeal with consequential relief to the appellant.

Summary

Issues:
1. Whether services provided during the warranty period by a third party can be considered as input services for availing credit of service tax paid.

Analysis:

Issue 1: Services provided during the warranty period by a third party

The appellant, a manufacturer of watches, engaged a third party, M/s Alfa International, to provide repair services to customers during the warranty period. The appellant claimed credit for the service tax paid by M/s Alfa International. The dispute revolved around whether such services could be considered as input services for availing credit.

The Tribunal referred to precedent decisions to resolve the issue. In the case of CCE Vadodara Vs Danke Products [2009 (16) STR 576 (Tri-Ahmd)], it was held that repair and maintenance services during the warranty period are activities related to the sale of goods and qualify as input services. Similarly, in the case of Gujarat Forging Ltd. Vs CCE [2014 (36) STR 677 (Tri-Ahmd)], it was established that maintenance and repair services provided during the warranty period are included in the definition of input services since the cost of the warranty period is already included in the assessable value of the final product.

Based on the precedent decisions, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant. The judgment clarified that services provided by a third party during the warranty period can indeed be considered as input services for availing credit of service tax paid.

This judgment provides clarity on the treatment of services provided during the warranty period by a third party in the context of availing credit for service tax paid, aligning with established legal principles and precedent decisions of the Tribunal.

This detailed analysis covers the issues involved in the judgment, providing a comprehensive understanding of the legal reasoning and outcome of the case.