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TMI Blog2021 (8) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT LTD VERSUS CCE INDORE [ 2017 (11) TMI 1481 - CESTAT NEW DELHI] , distinguished the earlier binding decisions of the Tribunal on a mistaken belief that an amendment had been made in a definition of input service , whereas the means clause of the definition had come up for consideration before the Tribunal and it had not been amended. The Division Bench proceeded on an assumption that the benefit of CENVAT credit was being taken by the appellant therein either under the includes clause or excludes clause of the definition of input service , which portion had been amended whereas reliance had been placed by the appellant on the decisions which had interpreted the means clause of the definition of the input service . It was, therefore, clearly a case where that part of the statutory provision that should have been applied was ignored and that part of the statutory provision that was not relevant to the controversy was considered. When CENVAT credit was sought to be justified by the appellant under the means clause, for which reliance was placed on the earlier decisions of the Tribunal, there was no necessity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such services in the assessable value of final products, as contemplated under section 4 of the Central Excise Act, 1944[ the Excise Act ] . 4. Pursuant to the aforesaid promotional strategy, the appellant entered into Dealership Agreement with various dealers across India. As per the Dealership Agreement, the dealers so appointed have to make efforts to promote the sale of final products and also provide after sales services thereof mandatorily during the warranty period, for which the dealers are required to maintain proper infrastructure and documentary evidences, including the service reports. Such services pertain to machine servicing activities comprising of commissioning services, services for compactors and loader backhoes, and breakdown services, as mentioned in the appellant s Service Policy Manual. The appellant has described the services as repair and maintenance services . 5. While providing the repair and maintenance services, the dealers have to comply with the checklist and technical instructions provided by the appellant in this regard. The appellant paid lump-sum commission to the dealers for rendering such services. As mentioned in Clause 6 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditioning Refrigeration Ltd. vs CCE, Gurgaon, 2016 (41) STR 1004 (Tri.-Delhi) ii) Samsung India Electronics Pvt. Ltd. vs CCE ST, Noida, 2017-TIOL-05-CESTAT-All. 5. The ld. DR justified the impugned order. He submitted that the definition of input service was modified w.e.f. 01.04.2011 and after such amendment, after sales service in the form of repair etc. is not covered by the definition. He further submitted that in the case laws cited by the appellant, the benefit stands allowed by the Tribunal during the period prior to 01.04.2011 and hence the cases are distinguishable . xxxxxxxx xxxxxxxx xxxxxxxx 9. After considering the amended definition of input service w.e.f. 01.04.2011, as contained in rule 2(l) of the Credit Rules, the Tribunal agreed with the findings recorded by the adjudicating authority and distinguished the decisions cited on behalf of the appellant holding that they had been rendered for a period prior to 01.04.2011 when the definition of input service was different. The relevant portions of the decision on this aspect are reproduced below : 7. Since the appellant is engaged in the manufacture of goods, it is covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawn by order dated 13.01.2021 for the reason that the matter was settled under the Sabka Vishwas Scheme, 2019. 11. For the subsequent period from July 2015 to December 2016, a show cause notice dated 03.05.2017 was also issued to the appellant proposing to deny CENVAT credit amounting to ₹ 63,95,326 with interest and penalty on the ground that the repair and maintenance services are not a specified category of input service and further are not used directly or indirectly, in or in relation to the manufacture of the final products. The show cause notice also mentions that the said services are also not covered under rule 2(l) of the Credit Rules because the definition of input service is restricted upto the factory or place of removal. 12. The appellant filed a detailed reply to the show cause notice on 11.10.2017 denying all the allegations. The Joint Commissioner, Ujjain, by order dated 27.12.2017 confirmed the entire demand of credit as proposed in the show cause notice with interest and further imposed a penalty equal to 10% of the demand confirmed, solely on the ground that rule 2(l) covers repair and maintenance service only in respect of factory or offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1004 (Tri.-Del) ]; (b) Honda Motorcycle Scooter India Pvt. Ltd. Ors. v. CCE ST, Alwar [ 2018 (12) TMI 929 CESTAT New Delhi] ; (c) Commissioner of C. Ex., Nashik v. Mahindra Mahindra Ltd. [ 2012 (28) STR 382 (Tri.-Mumbai) ] ; and (d) Samsung India Electronics Pvt. Ltd. vs Commissioner of Customs, Central Excise Service Tax, Noida. [ 2017-TIOL-05-CESTAT-MUMBAI ] (iii) In the alternative, the in-warranty repair and maintenance services are also covered in the inclusive portion of the input service definition under the term sales promotion ; (iv) Reliance on the order of the Tribunal in the own case of the appellant for the previous period, is misplaced. The Tribunal wrongly distinguished the authorities cited by the appellant by holding that the same were rendered for the period prior to the amendment of 2011 when the definition of input service was different. Firstly, out of the cases cited, the decision in the case of Carrier Airconditioning dealt with the period prior to and post 2011, namely July 2005 to May 2012. Secondly, the means portion of the input service definition remained unchanged even after the amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts. Accordingly, the final products carry contractual obligations of the appellant as the manufacturer of such goods, which are enumerated under the warranty policy of the final products. The dealers provide the services in accordance with the checklist provided by the appellant. The appellant also contends that it manufactured the final products with the sole intention to sell them and thus, sale of goods is integrally connected in relation to the manufacture of goods. The contention, therefore, is that since the repair and maintenance services are fundamentally linked to sale and sale directly affects the manufacturing activities, the services were used indirectly in relation to the manufacture of final products and would fall under the means part of the definition of input service . Thus, it has been contended that the appellant was justified in availing CENVAT credit of the service tax paid by the appellant on maintenance and repair services . 20. The issue, therefore, that arises for consideration in the present appeal is whether CENVAT credit of service tax paid by the appellant on repair and maintenance services provided by the dealers for fulfilling the war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (emphasis supplied) 23. Input service either prior to 01.04.2011 or w.e.f. 01.04.2011 means any service used by the manufacturer, whether directly or indirectly, or in relation to the manufacture of final products. The appellant is under an obligation to provide after sale service on the final products manufactured by it. The dealers provide the services and the appellant pays service tax on the amount paid by it to the dealers. The service is provided free of cost by the dealers during the warranty period but the appellant makes payment to the dealers for the services they provide to the customers. The repair and maintenance services are, therefore, linked to the sale. The services are, therefore, used indirectly in relation to the manufacture of final products. 24. This precise issue was examined by the Tribunal in Carrier Airconditioning Refrigeration and reliance was placed by the appellant on this decision when the matter was heard by the Tribunal for the earlier period from April 2011 to June 2015. It would, therefore, be appropriate to examine this decision of the Division Bench of the Tribunal. 25. The appellant therein was a manufacturer of airconditioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The point of dispute is as to whether the service provided by the dealers to the appellant is an input service and whether the appellant would be eligible for Cenvat credit in respect of the same. The service received by the appellants from their dealers is Business Auxiliary Service which has to be treated as an input service for the appellant used in or in relation to manufacture of their final products, as free warranty repair and maintenance during warranty period, has enriched the value of the goods. This issue stands decided in favour of the appellant by the Tribunal s judgment in the case of Danke Products (supra) and Gujarat Forgings (supra) and also in the case of Zinser Textile Systems Pvt. Ltd. (supra). In view of this, this Cenvat credit demand is also not sustainable and has to be set aside. [emphasis supplied] 26. In Honda Motorcycle Scooter India, the same issue was considered by a Division Bench of the Tribunal. The appellant was engaged in the manufacture of motorcycles scooters and had availed CENVAT Credit on inputs, capital goods and input services under the Credit Rules. The dispute was for the period June 2011 to March 2016 . The Tribunal ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not input services for the goods manufactured and cleared by the appellant. The Tribunal, in view of the earlier decision of the Tribunal in Mahindra Mahindra Ltd., held that the CENVAT credit can be taken on service tax paid on expenses incurred for providing warranty service. 29. The Division Bench of the Tribunal, in the own case of the appellant, for the earlier period from April 2011 to June 2015, however, took a contrary view holding that the earlier decisions of the Tribunal in Carrier Airconditioning Refrigeration and Samsung India Electronics were distinguishable since they were rendered for the period prior to 01.04.2011, when the definition of input service was different. The finding recorded by the Tribunal in this decision dated 24.11.2017, is again reproduced below: We have also perused the case laws citied by the appellant but find that the case laws have been rendered for the period prior to the 01.04.2011 when the definition of input service was different. We find that these case laws are not applicable for the period under consideration. 30. A perusal of the decision of the Tribunal in Carrier Airconditioning Refrigeration would indicate tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line to follow a case decided by itself or any other court (even one of superior jurisdiction), if the judgment erroneously assumed the existence or non-existence of a statute, and that assumption formed the basis of the decision. This exception to the rule of stare decisis is probably best regarded as an aspect of a broader qualification of the rule, namely, the courts are not bound to follow decisions reached per incuriam. 35. In State of U.P. vs. Synthetics and Chemicals Ltd [(1991) 4 SCC 139], the Supreme Court observed: 40. Incuria literally means carelessness . In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The quotable in law is avoided and ignored if it is rendered, in ignoratium of a statute or other binding authority . (Young vs. Bristol Aeroplane Co. Ltd [(1944) 2 All ER 293 (CA)] Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. 36. The maxim per incuriam is derived from the latin expression that means through inadvertence . The lit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iam. In order that a case can be decided per incuriam, it is not enough that it was inadequately argued. It must have been decided in ignorance of a rule of law binding on the court, such as a statute. (See the observations in Salmond on Jurisprudence Twelfth Edition, pages 150 and 169). 39. It, therefore, follows that the principle of per incuriam can be applied for such decisions which have been given in ignorance of some statutory provision or some authority that is binding. 40. In the present case, the Tribunal in the decision dated 24.11.2017, distinguished the earlier binding decisions of the Tribunal on a mistaken belief that an amendment had been made in a definition of input service , whereas the means clause of the definition had come up for consideration before the Tribunal and it had not been amended. The Division Bench proceeded on an assumption that the benefit of CENVAT credit was being taken by the appellant therein either under the includes clause or excludes clause of the definition of input service , which portion had been amended whereas reliance had been placed by the appellant on the decisions which had interpreted the means clause of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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