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M/s. Carrier Airconditioning & Refrigeration Ltd. Versus CCE, Gurgaon

2016 (3) TMI 124 - CESTAT NEW DELHI

Eligibility for cenvat credit of the service tax paid on the services received from sub-contractors - treatment as “input service” for the output service of repair and maintenance under AMC - Held that:- There is no dispute that the appellant during the period of dispute were paying service tax on their output service on repair and maintenance under AMC Contract. In our view, the service received by the Appellant from these sub-contractors (Business Auxiliary Service) is to be treated as “input .....

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his service is nothing but sales promotion service which is specifically mentioned in the definition of “input service” . This issue has been discussed at length in its judgement in the case of Ambika Overseas (2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COUR) and Birla Corporation (2014 (6) TMI 385 - CESTAT NEW DELHI), wherein it has been held that this service is covered by the definition “input service” and would be eligible for cenvat credit. In view of this, the cenvat credit demand is also no .....

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es. During the warranty period, the appellant were under obligation to provide free repair and maintenance services to the consumers, who had purchased the air conditioners from them. However, instead of providing the free repair and maintenance service directly in discharge of their obligation, the appellant roped in the dealers who provided free repair and maintenance to the consumers on their behalf and the dealers for providing this service on behalf of the appellant, received the payment fr .....

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d maintenance during warranty period, has enriched the value of the goods. See Danke Products (2009 (7) TMI 137 - CESTAT, AHMEDABAD ) - This issue stands decided in favour of the appellant assessee - Excise Appeal No. E/3972/2012-EX(DB) - Final Order No.51977/2015 - Dated:- 11-6-2015 - SHRI RAKESH KUMAR, MEMBER (TECHNICAL) AND SMT. SULEKHA BEEVI C.S. MEMBER (JUDICIAL). For the Petitioner : Shri B.L. Narsimhan, Advocate For the Respondent : Shri Pramod Kumar, DR ORDER PER RAKESH KUMAR: The appell .....

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cted the same through contractors who were providing the service on behalf of the appellant. The dispute is in respect of the cases where the appellant provided the repair and maintenance service under Annual Maintenance Contract through sub-contractors. In these cases, the appellant paid service tax on the amount received by them from the service recipients whose air conditioners had been repaired/serviced. The Appellant had paid certain amount to sub-contractors, who had undertaken the repair .....

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partment is of the view that the appellant would not be eligible for cenvat credit of the service tax paid by the sub-contractors on the Business Auxiliary Service. The cenvat credit demand of ₹ 37,75,54,356/- is on this basis. 2. During the period of dispute, the appellant utilized the services of commission agents for procuring the sales orders for air-conditioners and they took cenvat credit of the service tax paid by the commission agents. The Department , however, is of the view that .....

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period, they had roped in the certain dealers, who had provided the repair & maintenance service during the warranty period and for which, the payment was received by them from the appellant and on such amount, the service tax was paid by the dealers. The point of dispute is as to whether the appellant would be eligible for credit of service tax paid by the dealers on the repair and maintenance service provided by them to the consumers on behalf of the appellant. The department is of the vie .....

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nalty of equal amount on the appellant under Section 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act, 1944. The Commissioner in this order held that the services, in question, have no nexus either with the manufacture of final products or the same have been received after removal of the goods from the factory. Against this order of the Commissioner, this appeal has been filed. 4. Heard both the sides. 5. Shri B.L. Narsimhan, Advocate, ld. Counsel for the .....

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d roped in the sub-contractors, that the service provided by the sub-contractors is an input service for the output service of repair and maintenance under AMC provided by the appellant and this would be covered by the definition of input service under its main definition clause, that the cenvat credit demand of ₹ 37,75,54,356/- is, therefore, without any basis, that the Commissioners observations in this regard in para-38 of his order that this service having been received after clearanc .....

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the commission agents in respect of service of procuring sales orders received by the appellant, this service is nothing but sales promotion which is specifically covered by inclusive portion of the definition of input service , that the Tribunal in the case of Birla Corporation reported in 2014 (35) STR 977 has held that the commission agent s service is covered by the definition of input service , even after the period w.e.f. 1.4.2011 when the term activities relating to the business had been .....

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during the warranty period, that this service received from the dealers is an input service for the appellant and is covered by the definition of input service and hence the same would be eligible for cenvat credit, that in this regard he relies upon the Tribunal s judgement in the cases of CCE Vs. Danke Products reported in 2009 (16) STR 576 (Tribunal-Delhi) and also the judgement in the case of Gujarat Forging Ltd. Vs. CCE reported in 2014 (36) ELT 677 and Zinser Textile Systems Pvt. Ltd. Vs. .....

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e considered the submissions from both the sides and perused the records. 8. The appellant are manufacturers of air conditioners chargeable to central excise duty. Though the ld. Jt. CDR states that they were not providing any input service and were not registered as service providers, from the appellants Service Tax Registration Certificate placed on record, it is clear in addition to central excise registration as manufacturer of air conditioners, the appellant had been issued a centralized S .....

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nance service under Annual Maintenance Contract on their behalf. In such cases, sub-contractors have provided business Auxiliary Services to the appellant and the appellants have provided the post-warranty repair and maintenance service under AMC to the consumers. While the appellant were paying the service tax on the repair and maintenance service provided by them to the consumers, the sub-contractors were paying service tax on the amount received by them from the appellant for the Business Aux .....

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s to be treated as input service for the output service of repair and maintenance under AMC and the ground on which the Commissioner has denied the service tax in respect of these services is totally wrong. In view of this, the cenvat credit demand of ₹ 37,75,54,356/- is not sustainable and has to be set aside. 9. As regards the cenvat credit demand of ₹ 3,34,60,922/- this demand is in respect of the service tax paid by the commission agents on the service of procuring sales orders p .....

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n the case of Birla Corporation (supra), wherein it has been held that this service is covered by the definition input service and would be eligible for cenvat credit. In view of this, the cenvat credit demand of ₹ 3,34,60,922/- is also not sustainable. 10. The cenvat credit demand of ₹ 9,82,03,090/- is in respect of the service received from the dealers who had provided repair and maintenance service during warranty period on behalf of the appellant to the customers. The sale price .....

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