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2022 (7) TMI 87 - AT - Central ExciseCENVAT Credit - input services - services provided to the third party on free of cost basis - HELD THAT - The same issue in the appellant s own case has been decided by this Tribunal in HITACHI HOME AND LIFE SOLUTIONS INDIA LTD. AND JOHNSON CONTROL HITACHI AIR CONDITIONING INDIA LTD VERSUS C.C.E. S.T. -AHMEDABAD-III 2022 (4) TMI 130 - CESTAT AHMEDABAD which is for the earlier period and this case is for the subsequent period except the period there is no change in the facts and circumstances of the case - It was held in the case that the credit on warranty service provided free of cost during the warranty period through third parties cannot be denied. Credit allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to Cenvat credit for services provided free of cost to a third party. Issue-Wise Detailed Analysis: 1. Entitlement to Cenvat credit for services provided free of cost to a third party: The primary issue in this case is whether the appellant is entitled to Cenvat credit for services provided to a third party on a free-of-cost basis. The appellant argued that the same issue had been previously decided in their favor by the Tribunal for an earlier period, with no change in the facts and circumstances for the subsequent period under consideration. The Tribunal reviewed the submissions and records, noting that the issue is no longer res-integra. In the appellant's own case, the Tribunal had previously passed an order favoring the appellant's entitlement to Cenvat credit on warranty services. This earlier decision examined the admissibility of Cenvat credit on services used directly or indirectly in relation to the manufacture of final products, as per the definition of 'input service' under rule 2(l) of the Credit Rules. The Tribunal's analysis highlighted that the appellant's final products, which are expensive and require specific maintenance, carry contractual obligations under the warranty policy. The services provided by dealers during the warranty period are integral to the appellant's promotional strategy and are fundamentally linked to the sale and manufacture of the final products. Thus, these services fall under the 'means' part of the definition of 'input service,' which includes services used directly or indirectly in relation to the manufacture of final products. The Tribunal referenced several precedents, including decisions in the cases of Carrier Airconditioning & Refrigeration, Honda Motorcycle & Scooter India, and Samsung India Electronics, which supported the appellant's position. These cases established that services provided by dealers during the warranty period are considered 'input services' used in or in relation to the manufacture of final products, thereby justifying the appellant's claim for Cenvat credit. The Tribunal also addressed a contrary decision in the appellant's own case for an earlier period, which had distinguished the earlier favorable decisions on the basis of an amendment to the definition of 'input service' post-01.04.2011. However, the Tribunal clarified that the amendment only affected the 'includes' part of the definition, not the 'means' part, which remained relevant to the appellant's claim. In conclusion, the Tribunal found that the appellant correctly availed Cenvat credit for the service tax paid on services provided by dealers to customers on behalf of the appellant for fulfilling warranty obligations. The impugned order was set aside, and the appeal was allowed, affirming the appellant's entitlement to Cenvat credit for the services in question.
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