2015 (10) TMI 1025 - AT - Central Excise

CENVAT Credit - whether the appellant is entitled to take Cenvat credit on repairs and maintenance services provided by the service provider on behalf of the appellant to the buyers during the period of warranty or not - Held that - appellant has sold alternators under warranty. During the warranty period, appellant is duty bound to provide free services to the buyers of alternator. For that, appellant has appointed services providers. Therefore, services provided by the services provider is a condition of sell and covered by the definition of Rule 2 of the Cenvat Credit Rules, 2004 under any activity relating to the business. Admittedly, if appellant does not provide the services the customers is not able to do the business. Therefore, these services are apparently availed by the appellant as the activity relating to the business. Consequently, I hold that appellant is entitled to take Cenvat credit on repairs and maintenance provided by services provider during the period of warranty on behalf of the appellant. - Decided in favour of assessee.

Summary

Issues:
- Denial of Cenvat credit for repairs and maintenance services provided during the warranty period.

Analysis:
The appellant, a manufacturer of alternators, sold goods with a warranty that included repairs and maintenance services to be provided by the appellant. The appellant engaged service providers to perform these services, paying Service Tax and claiming Cenvat credit on the tax paid. The Revenue contended that since the services were rendered after the sale and the ownership had transferred, they could not be considered input services. The Adjudicating Authority initially allowed the credit, citing a precedent. However, the Revenue appealed, leading to the denial of the credit. The appellant argued that the services were a condition of sale, relying on legal precedents supporting their position.

The key issue was whether the appellant was entitled to claim Cenvat credit for repairs and maintenance services provided by service providers during the warranty period. The Tribunal rejected the Revenue's argument that the services were post-sale and not eligible for credit. The Tribunal distinguished previous cases related to GTA services, emphasizing that the appellant's provision of free services during the warranty period was a condition of sale and fell under the definition of activities related to the business in the Cenvat Credit Rules, 2004. As these services were necessary for the customers to conduct business, the Tribunal held that the appellant was entitled to claim Cenvat credit for the repairs and maintenance services provided during the warranty period.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and ruling in favor of the appellant's entitlement to Cenvat credit for the repairs and maintenance services provided during the warranty period.