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2024 (3) TMI 277 - AT - Central ExciseCENVAT Credit - input services or not - warranty free services - HELD THAT - The identical issue in the appellant's own case has been considered at length by this Tribunal and thereafter, this Tribunal has allowed the appeals of the appellant - Reliance can be placed in the case of JCB INDIA LTD. VERSUS CCE- DELHI-IV 2023 (5) TMI 133 - CESTAT CHANDIGARH where it was held that The appellant has 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. The impugned orders are not sustainable in law and therefore set aside - appeal allowed.
Issues Involved:
1. Wrongful availment of Cenvat Credit on "warranty free services." 2. Definition of "input services" under Rule 2(l) of Cenvat Credit Rules, 2004. 3. Eligibility of Cenvat Credit for services provided beyond the place of removal. Summary: 1. Wrongful Availment of Cenvat Credit on "Warranty Free Services": The appellant, engaged in manufacturing Excavator Loaders and Earthmoving Machines, offered free services during the warranty period through its dealers. The dealers provided these services on behalf of the appellant and charged the appellant, who then took Cenvat Credit for the service tax paid. During an audit, the department alleged wrongful availment of Cenvat Credit, leading to the issuance of show cause notices for denial and recovery of the said credit. The impugned orders confirmed the demand of Cenvat Credit along with interest and equivalent penalty. 2. Definition of "Input Services" under Rule 2(l) of Cenvat Credit Rules, 2004: The main contention was whether the after-sale services provided by the dealers fell under the definition of "input services" as per Rule 2(l) of Cenvat Credit Rules, 2004. The adjudicating authority argued that these services were provided beyond the place of removal and thus did not qualify as input services. The appellant countered that these services were integrally connected to the sale and manufacture of the final products, thereby qualifying as input services. 3. Eligibility of Cenvat Credit for Services Provided Beyond the Place of Removal: The appellant argued that the repair and maintenance services during the warranty period were essential for fulfilling warranty obligations, which in turn enhanced the marketability of their products. They contended that such services were indirectly related to the manufacture of final products and thus should be eligible for Cenvat Credit. The Tribunal noted that similar issues had been decided in favor of the appellant in previous cases, including decisions by the Tribunal and High Courts. Judgment: The Tribunal found that the impugned orders were not sustainable in law. It held that the appellant had correctly availed Cenvat Credit on the service tax paid for services provided by the dealers to fulfill warranty obligations. The Tribunal relied on several precedents, including its own previous orders and High Court decisions, to conclude that the credit on warranty services provided free of cost during the warranty period through third parties could not be denied. Consequently, the appeals were allowed with consequential relief as per law. Operative Part: The impugned orders were set aside, and the appeals of the appellant were allowed with consequential relief, if any, as per law.
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