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2019 (6) TMI 856 - CESTAT CHENNAIValuation - inclusion of warranty claims in assessable value - reverse charge mechanism - Section 66A of FA - Revenue neutrality - extended period of limitation - HELD THAT:- We do not find that the appellants had paid any incentives to the Overseas Distributors for sales promotion and marketing. The entire demand is on the amount paid by the appellant to the Overseas Distributors for the warranty claims. The adjudicating authority is of the opinion that when the Overseas Distributors establish the network of Authorized Repairers for carrying out the warranty claims on behalf of the manufacturer (appellant herein), the said activity would be customer care service and also provision of service on behalf of the client. It needs to be said that though the Overseas Distributors may have carried out the repair and maintenance services and established the network of Authorized Repairers for the benefit of the manufacturer, the Overseas Distributors have not directly carried out any service to the customer. When the Overseas Distributor is establishing the network of Authorized Repairers for carrying out the warranty responsibility of the appellant, indeed, this will satisfy ‘customer care services’ provided on behalf of the client contained in Sub-Clause (iii) of the definition of ‘Business Auxiliary Service’, and would be taxable. Extended period of limitation - HELD THAT:- The period involved is from October 2008 to March 2015. The documents produced show that audits were conducted in 2008, 2009 and the subsequent years. The letter dated 15.09.2009 shows that Internal Audit was conducted from 17.08.2009 to 31.08.2009. The letter dated 06.06.2013 is an intimation of CERA Audit wherein the appellant is informed that Officers would be visiting their unit from 24.06.2013 to 28.06.2013. Even though such repeated audits had been conducted, the Show Cause Notice for the period from October 2008 to March 2013 was issued only on 28.03.2014 - In the present case, even if the Service Tax is paid as demanded by the Department, the appellant would be eligible to avail credit of the same. Thus, the situation is wholly a revenue neutral one. The extended period of limitation cannot be invoked alleging intention to evade payment of Service Tax when the entire transaction amounts to a revenue neutral situation - The demand raised invoking the extended period of limitation cannot sustain and requires to be set aside. Demand for the period post 01.07.2012 - HELD THAT:- In the present case, the services of repair and maintenance are actually performed outside India. Section 66A applies only where the service is received in India. In this case, the Business Auxiliary Service, viz., providing ‘customer care service’ on behalf of the appellant took place outside India. The same therefore cannot be taxable within India and hence, the demand post 01.07.2012 cannot sustain. Appeal allowed in part.
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