2019 (3) TMI 1282 - AT - Service Tax

CENVAT Credit - inputs Spare Parts and Input Services used in providing free of cost Repair & Replacement Services during warranty period - principles of natural justice - Held that - Revenue in their memo of appeal have not doubted the applicability of the said two decisions of the Tribunal M/S. CARRIER AIRCONDITIONING & REFRIGERATION LTD. VERSUS CCE, GURGAON 2016 (3) TMI 124 - CESTAT NEW DELHI and M/S. IFB INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, CHANDIGARH 2018 (1) TMI 429 - CESTAT CHANDIGARH to the facts and circumstances of the case. The only contention raised is that the said decisions have not attained finality in litigation. However, there is no reference to any appeal filed by the Revenue against the said decisions before the higher Appellate Forum or the stay of operation of the said decision. In such a scenario, the applicability of the said two decisions relied upon by Commissioner in his impugned order, cannot be faulted upon. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Irregular availing of Cenvat credit for spare parts and input services used in providing free repair and replacement services during warranty period.
2. Admissibility of Cenvat credit for services provided free of cost during warranty period.

Analysis:
1. The main issue in the present appeal was whether the respondent irregularly availed Cenvat credit for spare parts and input services used in providing free repair and replacement services during the warranty period. The Revenue contended that the warranty services were exempted as the customer did not pay for the taxable services. The Commissioner observed that the value of the repair and maintenance services during the warranty period was included in the initial cost of the goods sold, and Central Excise duty was paid at the time of sale. The Commissioner referred to a Tribunal decision that held the appellant correctly availed Cenvat credit on input services for taxable services during the warranty period.

2. The Commissioner also referenced another Tribunal decision in a similar case, where it was held that providing repair and maintenance services during the warranty period, even if free of cost, did not make the service exempted. The Tribunal in that case decided in favor of the assessee, stating that the appellant correctly availed Cenvat credit on input services for taxable services during the warranty period. The Revenue did not challenge the applicability of these Tribunal decisions to the case at hand but argued that the decisions had not reached finality in litigation. However, since there was no appeal filed by the Revenue against these decisions or a stay of their operation, the Commissioner's reliance on these decisions in the impugned order was deemed valid.

In conclusion, the Revenue's appeal was rejected as it lacked merits, considering the consistent Tribunal decisions supporting the appellant's position on the admissibility of Cenvat credit for services provided free of cost during the warranty period.