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2016 (12) TMI 771 - AT - Central ExciseCENVAT credit - credit of service tax on warranty provided by their dealers - input services or not - Held that - The issue has been settled by this Tribunal in the case of Commissioner of Central Excise, Vodadara 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.
Issues: Appeal against Order-in-Appeal denying Cenvat credit on service tax paid on warranty provided by dealers for Excavators, Backhoe Loader & Skid Steer.
Analysis: 1. Facts of the Case: The appellant, a manufacturer of equipment, was denied input service credit on service charges paid to dealers during the warranty period. A Show Cause Notice was issued for recovery of Cenvat credit of ?33,344 for the period from April 2012 to December 2012. The Order-in-Original confirmed the demand, which was upheld by the Commissioner (Appeals) in the subsequent Order-in-Appeal. 2. Legal Argument: The appellant argued that the warranty service provided by dealers after the sale of equipment should be considered as an activity relating to the sale of goods, entitling them to input service credit. The Revenue contended that warranty services are not input services for the manufacturer of the goods. 3. Precedent Decision: The Tribunal referred to a previous case where it was held that repair and maintenance during the warranty period is an activity related to the sale of goods. Citing the decision in the case of Commissioner of Central Excise, Vadodara II Vs. Danke Products, the Tribunal concluded that the appellant is entitled to input service credit on repair charges paid to dealers during the warranty period. 4. Final Decision: The Tribunal found the precedent decision applicable to the present case and allowed the appeal, setting aside the Order-in-Appeal. The Tribunal granted consequential relief to the appellant in accordance with the law. The appeal was allowed based on the established legal principle that warranty services provided by dealers post-sale should be considered as activities related to the sale of goods, entitling the manufacturer to claim input service credit on repair charges paid during the warranty period.
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