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TMI Blog2023 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ery was raised by the Assistant Commissioner (Audit), CGST, Audit Circle-Haldwani in respect of the availment of Cenvat credit of Service Tax paid to ASP for warranty support services provided to the end customers of the appellant. In furtherance of this query the appellant replied vide letters dated 25.01.2018, 17.05.2018 and 20.07.2018. However, department observed that services provided by the ASPs have been rendered after the clearance of the final products. Therefore, the services are not covered in the first part of the definition of input services. In the second part of the definition there is no mention of the services of Free Warranty anywhere, thus, the services does not fall in this part as well. The ASPs are independent entities which provide this service to the customers of the appellant. The said customers are independent service recipient of service provided by the ASPs, although under the directions of the appellant, the ASPS were at the liberty to raise bill on the customers as well. This service rendered by the APSs, during the warranty period, are classified as "Business Auxiliary Service" by courts of law which do not qualify as input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal. Further, the definition of input service also contained an inclusive clause and an exclusion clause listing the services specifically included and excluded from the definition of input service. Decision is M/s. Samsung India Electronics Pvt. Ltd. Vs. Commissioner of Customs, Central Excise and Service Tax, Noida is relied upon wherein it was held that the amount charged for warranty is included in the price actually paid or payable for the goods sold and such price charge in transaction value. Therefore, the service tax paid on the expenses incurred for providing warranty services qualifies for Cenvat credit of input service. Learned counsel also relied upon the decision of Commissioner of Central Excise, Nashik Vs. Mahindra and Mahindra Ltd., wherein the definition of transaction value was interpreted to include the value of warranty in the scope of the transaction value in Section 4(3) of the Central Excise Act. Further in the case of Carrier Air-conditioning & Refrigeration Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 w.e.f. 01.04.2011, the rules specifically provided that only the services upto the place of removal were eligible for taking of credit, and that services used after the place of removal were excluded from the scope of definition of input service. Credit is available in respect of specific activities that would have been used upto the place of removal. Activities such as advertisement, sales promotion, marketing research, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition and legal services are in the inclusive part of the definition of inputs. It therefore clearly follows that other services which not so specifically included but are clearly identifiable as having being used after the place of removal, no credit could be admissible thereon. It is impressed upon that in view of the specific exclusion of services being utilized after the place of removal, it has rightly been held by the adjudicating authority that any interpretation that would render a provision of law otiose or redundant should be avoided. The decision of Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing three main heads: i. The first part of the definition provides, inter alia, that "input service" means any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal: ii. The second part of the definition comprises of the inclusive part which expands the scope of the first part of the definition and covers services such as advertisement or sales promotion, market research and auditing, financing, security, etc. The list is illustrative only; and iii. The last part of the amended definition comprises of the specific exclusions made to the definition of input services. 7. We observe that the first part of the definition, covers services which are used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal. We opine that the phrase 'in or in relation to' used in the definition of 'input service widens the scope of the said definition. We rely on the judgment of the Hon'ble Supreme Court in Collector of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the inclusive part, which further widens the ambit of the definition of 'input service'. We opine that all taxable services without which the providing of output service/manufacture of final products would be impossible or commercially inexpedient, would be covered herein. Thus we hold that any service, which either has any nexus to the activity of manufacturing or if it is in relation to the business of manufacture of goods would get covered under the definition of input service. We also observe that the value of such service is included in their assessable value, it follows that the credit thereon is admissible as per intent of Cenvat Credit Scheme. Thus we hold that service in question of providing warranty and after sales services is the input service eligible for Cenvat. 10. Now coming to the aspect as to whether the warranty charges forms part of the assessable value of the final product on which Central Excise duty is paid by the Noticee. As already observed that the cost of the disputed services forms part of the assessable value of the final products and on same applicable service tax has already been discharged as and when due.&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery. Relying on the above observation the Hon'ble Supreme Court in the case of Collector of Central Excise, Chandigarh v. Eicher Tractors Ltd., 2004 (164) ELT 129 (SC), has held that the labour charges for repair during the warranty period compulsorily collected from the customers has to be included in the assessable value of the final products. Thus, the cost of warranty forms part of the assessable value and this is no longer res integra. 11. Based on these decisions, we hold that the intent of Cenvat Credit scheme is to reduce the cascading effect of taxes by preventing the build-up of taxes in the cost of products. Therefore, a manufacturer should be entitled to avail Cenvat credit of Service Tax paid on all those services, the cost of which is getting included in the assessable value of the final product. By not allowing the Cenvat Credit on such services would be against the intent of Cenvat Credit scheme. These decisions have been followed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be eligible for Cenvat credit in respect of the same. The service received by the appellants from their dealers is Business Auxiliary Service which has to be treated as an input service for the appellant used in or in relation to manufacture of their final products, as free warranty repair and maintenance during warranty period, has enriched the value of the goods. This issue stands decided in favour of the appellant by the Tribunal's judgment in the case of Danke Products (supra) and Gujarat Forgings (supra) and also in the case of Zinser Textile Systems Pvt. Ltd (supra), in view of this, this Cervat credit demand is also not sustainable and has to be set aside." 13. Thus, we conclude that the Cenvat credit was allowed for both the period prior to and post the amendment of 2011 on the ground that the warranty charges were included in the value of goods sold to the customers and Central Excise duty was paid on this value. Further, the assessee was under an obligation to provide free repair and maintenance services and instead of directly providing these services they had engaged dealers to provide them to the customers. It is thus clear that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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