2015 (10) TMI 2589 - AT - Central Excise

Denial of CENVAT credit - repair and maintenance service during warranty period - Held that - The issue has been settled by this Tribunal in the case of Commissioner of Central Excise, Vadodara II Vs. Danke Products 2009 (7) TMI 137 - CESTAT, AHMEDABAD wherein it has been held that repair and maintenance of transformers during warranty period is an activity of relating to sale of goods. Therefore, relying on the decision of the Tribunal in the case of Danke Products, I hold that the appellant is entitled for input service credit on repair charges paid to the dealers by the appellant as the same is an activity relating to sale of goods by the appellant - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Admissibility of service tax credit paid by different service centers of dealers
- Entitlement to input service credit on repair charges paid to dealers during warranty period

Admissibility of service tax credit:
The appellant, a registered dealer under Central Excise, was observed to be taking credit of service tax paid by different service centers of dealers, which was deemed inadmissible during an audit. Both parties agreed that the issue was covered by a previous Final Order. The Tribunal allowed the appeal, citing the earlier order and stating that the issue was the same, and the parties were in agreement. The Tribunal referenced the appellant's manufacturing activities and the warranty clause related to the sale of equipment through dealers. It was noted that the repair charges paid to dealers during the warranty period were considered an activity relating to the sale of goods, entitling the appellant to input service credit based on a precedent set by the Tribunal in a previous case.

Entitlement to input service credit on repair charges:
The Tribunal referred to a case involving repair and maintenance of transformers during a warranty period, where it was established that such activities were related to the sale of goods. Relying on this precedent, the Tribunal held that the appellant was entitled to input service credit on repair charges paid to dealers during the warranty period. The impugned orders were set aside, and the appeals were allowed in favor of the appellant with consequential benefits, if any, in accordance with the law. The application for an extension of stay was also disposed of in line with the decision on the appeals.