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2014 (5) TMI 641 - AT - Central ExciseCENVAT Credit - Warranty charges - Denial of CENVAT Credit of Service Tax paid on bills/ invoices issued by M/s Jayshree Enterprise, Rajkot who were providing Maintenance and Repairing Services of Diesel Engines cleared by the Appellant within one year warranty period - Revenue contends that such repair & maintenance of engines during warranty period would not fall under the category of input service as the scope of the credit is restricted to the services used at factory premises and not beyond that point. - Penalty u/s 11AC. Held that:- Appellants were engaged in the manufacture of electrical transformers and those were cleared on payment of duty. As per the terms of contract, the assessee was under obligation to repair and maintain the transformers during the warranty period free of charge. Those jobs of repair and maintenance were entrusted to third person who raised bills for repair and maintenance on assessee in turn the assessee took credit of Service Tax so paid. The issue was dealt with by the Tribunal which stands decided in favour of the assessee. In the present case before me the Appellant as per the terms of the warranty were under obligation to provide repair and maintenance service to their customer. Moreover it is an undisputed fact as apparent from the cost accountant s certificate for the respective years annexed with the appeal memo that the value of such services already stands included in the assessable value of the Diesel Engines. Transaction value means the price actually paid or which are payable for the goods when sold and those includes servicing and warranty also. Admittedly the service and warranty is post manufacturing expenses which are to be provided to the customer after sale. I therefore hold that the Appellant is entitled for credit of the Service Tax paid on expenses on such repair and maintenance during the warranty period, which is basically after sales charges and hold that the impugned orders disallowing credit are not sustainable. Issue of availment of credit was apparent from the records and the audits were conducted in the previous periods and no objections were raised. Secondly the issue involved is related to interpretation of term ‘Input Services’. In such view of the facts of this case, the demands raised against the Appellant by invoking extended period of limitation are not sustainable and apart from merits the same are set aside on the ground of limitation also. - Decided in favour of assessee.
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