2021 (8) TMI 963 - AT - Central Excise

CENVAT Credit - services provided by the dealers to the customers on behalf of the appellant - meaning of input services pre and post 01.04.2011 - reliance to be placed on precedent decisions - whether the earlier Division Bench decisions of the Tribunal in M/S. CARRIER AIRCONDITIONING REFRIGERATION LTD. VERSUS CCE, GURGAON 2016 (3) TMI 124 - CESTAT NEW DELHI , M/S HONDA MOTORCYCLE SCOOTER INDIA PVT. LTD., SHRI SUNIL GUPTA AND SHRI NAVEEN KUMAR VERSUS CCE ST, ALWAR 2018 (12) TMI 929 - CESTAT NEW DELHI and M/S SAMSUNG INDIA ELECTRONICS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX 2016 (11) TMI 867 - CESTAT ALLAHABAD should be relied upon as precedents and the decision of the Tribunal rendered on 24.11.2017, in the own case of the appellant, should be taken to have been rendered per incuriam? - HELD THAT - The principle of per incuriam can be applied for such decisions which have been given in ignorance of some statutory provision or some authority that is binding. In the present case, the Tribunal in M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT LTD VERSUS CCE INDORE 2017 (11) TMI 1481 - CESTAT NEW DELHI , distinguished the earlier binding decisions of the Tribunal on a mistaken belief that an amendment had been made in a definition of input service , whereas the means clause of the definition had come up for consideration before the Tribunal and it had not been amended. The Division Bench proceeded on an assumption that the benefit of CENVAT credit was being taken by the appellant therein either under the includes clause or excludes clause of the definition of input service , which portion had been amended whereas reliance had been placed by the appellant on the decisions which had interpreted the means clause of the definition of the input service . It was, therefore, clearly a case where that part of the statutory provision that should have been applied was ignored and that part of the statutory provision that was not relevant to the controversy was considered. When CENVAT credit was sought to be justified by the appellant under the means clause, for which reliance was placed on the earlier decisions of the Tribunal, there was no necessity to examine whether it can be justified under the includes clause or excludes clause of the definition. The decision rendered by the Tribunal on 24.11.2017 is, therefore, clearly per incuriam. It is, therefore, considered appropriate to follow the three decisions rendered by the Tribunal in Carrier Airconditioning Refrigeration, Honda Motorcycle and Samsung India Electronics in preference to the later decision in M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT LTD VERSUS CCE INDORE 2017 (11) TMI 1481 - CESTAT NEW DELHI , which has distinguished these three decisions on a non-existent ground. The appellant correctly availed CENVAT credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Eligibility of CENVAT credit on 'repair and maintenance services' under the definition of 'input service' in the CENVAT Credit Rules, 2004.
2. Applicability of precedents and the principle of per incuriam.
3. Imposition of penalty and interest.

Issue-wise Detailed Analysis:

1. Eligibility of CENVAT credit on 'repair and maintenance services':
The appellant, engaged in manufacturing automotive parts, included after-sales services in the assessable value of its products. The services were provided by dealers during the warranty period. The appellant claimed CENVAT credit on the service tax paid for these services, arguing they were integral to the sale and thus indirectly related to the manufacture of final products. The Department, however, denied the credit, asserting that post-2011 amendments to the definition of 'input service' excluded such services.

The Tribunal examined the definition of 'input service' before and after the 2011 amendment. It concluded that the 'means' part of the definition, which remained unchanged, covered services used indirectly in the manufacture of final products. The Tribunal relied on previous decisions (Carrier Airconditioning & Refrigeration Ltd., Honda Motorcycle & Scooter India Pvt. Ltd., and Samsung India Electronics Pvt. Ltd.) that supported the appellant's position, stating that repair and maintenance services during the warranty period enriched the value of the goods and were thus input services.

2. Applicability of precedents and the principle of per incuriam:
The Tribunal's earlier decision in the appellant's case for the period April 2011 to June 2015 had denied CENVAT credit, distinguishing the cited precedents on the ground that they pertained to the period before the 2011 amendment. However, the Tribunal noted that these precedents also covered periods post-2011 and were based on the unchanged 'means' part of the definition. The Tribunal held that the earlier decision was rendered per incuriam, as it ignored binding precedents and statutory provisions relevant to the case.

3. Imposition of penalty and interest:
The appellant argued that penalty and interest should not be imposed. The Tribunal, agreeing with the appellant's interpretation of the 'means' clause of 'input service', found no basis for penalty or interest, as the appellant had correctly availed CENVAT credit.

Conclusion:
The Tribunal set aside the order of the Commissioner (Appeals), holding that the appellant correctly availed CENVAT credit on the service tax paid for repair and maintenance services provided by dealers during the warranty period. The appeal was allowed, and the imposition of penalty and interest was deemed unjustified.