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TMI Blog2023 (11) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... and through them to the ultimate customers - there are no merits in the submissions or the observations made by the lower authority contrary to this. It is quite evident that the maintenance repairs and construction manual, is like an idiot guide to the dealers for undertaking the work of repairs and maintenance of the vehicles ensuring compliance with the high safety standards set by Honda Motors, by use of the genuine parts supplied by the appellant. It provides how to further maintain and repair the vehicles brought to the dealers by their customers. Such standardization is absolutely essential to ensure that standard set by the manufacturer are achieved irrespective of the person or the dealer servicing the vehicle - This standardization will promote the sale of genuine parts which are supplied or sold by the appellants. Thus this manual is essential to the activities undertaken by the appellant through supply of genuine spare parts. Thus, denial of CENVAT credit in respect of services of development of Part Catalogue and Maintenance, Repair and Construction Manual cannot be upheld. As no demand survives the demand for interest and penalties imposed also are set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation Preparation Concerning Automobiles dated 01st October, 2010 ( Service Information Preparation Agreement ) with Honda Motor Japan. In terms of the Service Information Preparation Agreement, Honda Motor Japan is obligated to provide Appellant with repair and maintenance information, i.e. repair service manual and spare parts catalogue ( impugned Services ). The Appellant remits a periodical fee (annual fee) to Honda Motor Japan in consideration for the said services. As Honda Motor Japan is located outside India, Appellant pays applicable service tax on reverse charge basis. The Internal Audit Team of the Central Excise Commissionerate, Noida ( Audit Authorities ) conducted an audit of Appellant s records for the period April 2013 to March, 2014 in August/September, 2014. The Audit Authorities expressed doubts on admissibility of cenvat credit on Impugned Services. The revenue issued show cause notice dated 11.04.2016 proposing to deny cenvat credit of Rs.74,10,565/- availed on parts catalogue and service manual April 2011 to March 2015 respectively along with applicable interest and penalty. The Appellant submitted a detailed reply in response to SCN-1 on 27.07.2016 justifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both sides and perused the appeal records. 5. Arguing for the Appellant, learned counsel submits: ➢ services received by them for preparation of the Electronic parts Catalogue and Service Manual qualify as input services. ➢ The Electronic Parts Catalogue codifies the various parts, for their effective identification by them and their dealers/ suppliers the parts, for the purpose of procuring, retrieving and dispatch of the parts as desired by their customers. This makes their business operation and management of the parts more efficient and commercially expedient. Thus the services received by them for preparation of this manual essentially qualify as input service. ➢ Customer s desire standardized services from the dealers. The service manual codifies the service operations to be undertaken by the dealers in respect of the various complaints with which the vehicle owners approach the dealers. These service manner provides the manner in which these complaints are to be handled including the manner in which the parts to be replaced etc., are stored and sold to customers while handling these complaints. So the services of preparation of the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal and during the course of argument. 8. The only issue to decide in the present appeal is service admissibility of Cenvat Credit Rules paid on service tax under reverse charge mechanism by the Appellant on the service fees paid by them to their principals namely Honda Motor Company Ltd., Japan for development of Part Manual and Service Manual. 9. Appellant entered into agreement for Service Information Preparation Concerning Automobiles dated 01.10.2010 with Honda Motor Company Ltd., Japan. The relevant excerpts from the agreement are reproduced below:- Whereas, Honda Motor is engaged in, inter alia, the business of the development, manufacture and sale of automobiles and, through experience accumulated in such business, has acquired and possesses certain knowledge and abilities with respect to preparing certain service information relating to such automobiles; Whereas, HMI has the need for creating, updating or customizing certain service information in order to meet its requirements; and Whereas, Honda Motor is willing to provide to HMI certain specific services in connection with preparation of the said service information based on knowledge and abilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y agreement of the parties hereto in accordance with their requirements and circumstances. 4.2 The parties hereto acknowledge that the copyrights, patent rights and other intellectual property rights in and to the results of the Services shall remain the sole property of Honda Motor, and that nothing contained herein shall be construed as assigning or transferring any of those rights to HMI; provided that HMI will be entitled to create translations of the results of the Services and to make copies thereof to the extent necessary for the purpose referred to In Article 4.1 hereof. 4.4 On the sample basis appellant counsel had during the course of arguments produced a part catalogue. On page 1 of the catalogue, under the head Instruction for use of parts catalogue following is stated: ➢ This parts catalogue has been created as of July 20, 2005 ○ Since this date, the sales practice for repair parts may have been changed or the parts may have been eliminated (listed for those not for sale). ○ The modified information is reflected on the latest Electronic parts Catalogue (EPC). Also, refer to parts catalogue news for any change. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manual is intended for use by qualified, professional technicians. Attempting service or repairs without the proper training, tools and equipment could cause injury to you or others. It could also damage the vehicle or create an unsafe condition. This manual describes the proper methods and procedures for doing service, maintenance, and repairs. Some procedures require the use of specifically designed tools and dedicated equipment. Any person who intends to use a replacement part, a service procedure, or a tool that is not recommended by Honda, must determine the risk to their personal safety and the safe operation of the vehicle. If you need to replace any parts, always use the correct parts supplied by a HOnda dealer. Never use inferior quality parts. For Your Customer s Safety Proper service and maintenance are essential to the customer s safety and the reliability of the vehicle. Any error or oversight while servicing a vehicle can result in faulty operations, damage to the vehicle, or injury to others. WARNING Improper service or repairs can create an unsafe condition that can cause your customers or others to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x therefore, paid on expenditure incurred by the assessee on advertisements sales promotion, market research will have to be allowed as input stage credit more particularly if the same forms a part of the price of final product of the assessee on which excise duty is paid. In other words, credit of input service must be allowed on expenditure incurred by the assessee which form a part of the assessable value of the final product. If the above is not done, as sought to be done by the department in the present case, it will defeat the very basis and genesis CENVAT i.e. value added tax. 43. What follows from the above discussion is that the credit is availed on the tax paid on the input service, which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of the final product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. The manufacturer thereby can avail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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