C.C.E. & S.T.-Rajkot Vs Falcon Pumps Private Limited (CESTAT Ahmedabad)
CESTAT find that the service on which the respondent have taken the cenvat credit is provided in the nature of Repair & Maintenance of the excisable goods i.e. pumps sold by the respondent during the warranty period. It is also observed that the policy of free servicing during warranty period is not under dispute. The respondent is not collecting the service charges from the customer which is the service during the warranty period is provided free of cost therefore, the cost of such service stand included in the transaction value of the excisable goods sold by the respondent. In this fact, the service charges stand included in the value of the manufacture of goods hence, it can be conveniently viewed that the activity of servicing during warranty period is in relation to the manufacture of final product. Moreover, the servicing during warranty period is a vital part of the business activity of the respondent.
Rule 2(l) particularly in the inclusion clause covers the ‘activities relating to business’ therefore, the said service during warranty period also clearly falls under the category of ‘activities relating to business’.
CESTAT held that respondent are entitle for the cenvat credit on the service of Repair & Maintenance during warranty period
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved is that whether the appellant is entitle for cenvat credit in respect of after sale service provided during warranty period of the sale of the goods manufactured by the respondent.
02. Shri Vijay G. Iyengar, learned Assistant Commissioner (AR) appearing on behalf of the revenue reiterates the grounds of appeal. He submits that the service provided during warranty period is after removal of the goods from the factory therefore, the service is not provided in or in relation to the manufacture of excisable goods. He submits that as per rule 2(l), the only services which were provided up to the place of removal is cenvatable whereas, in the present case the service of after sales service in respect of the goods manufactured and sold by the respondent was provided after removal and sale of the pumps therefore, the cenvat credit is not admissible.
03. Shri P D Rachchh, learned counsel appearing on behalf of the respondent submits that the after sale service during warranty period is included in the term ‘in or in relation to manufacture of excisable goods’. The value of such service has been included in the transaction value of the pumps sold by the respondent on which excise duty was discharged. He submits that in this fact firstly, the service was used in or in relation to manufacture of final product secondly, even if there is any demand, the service is clearly covered under the inclusion clause of service related to business activity therefore, on both the count the respondent are entitle for the cenvat credit. He placed reliance on the following judgments:-
