Order Date – 13 December 2023

Parties: M/s Escorts Construction Equipment Ltd. Vs CCE, Delhi-IV

Facts –

• The Appellant, M/s Escorts Construction Equipment Ltd., are engaged in the manufacture of cranes and earthmoving machinery and are availing CENVAT credit. They also providing free of cost warranty services to its customers through its authorized dealers.
• The dealer does not charge any amounts from the customers but recovers such amounts from the appellant by raising a sale invoice/debit note which included a component of service tax. The appellant make payments to the authorized dealer and availed the credit of service tax. Both consideration and service tax amounts were paid by the appellant.
• A show cause notice was issued dated 07.02.2011 proposing to deny the CENVAT credit of service tax paid to the dealers in relation to such after sales services as the said services were allegedly not used in or in relation to manufacture of products and hence could not be covered in the definition of input service as provided under Rule 2(l) of the CCR, 2004.

Issue –

• Whether appellant can avail credit of service tax paid to the dealers

Order –

• The Tribunal observed that the issue involved in the present case has been considered in the appellant’s own case for a different period by this Bench of the Tribunal and vide its order dated 05.07.2018 in which it was held that “the free service sale services of the vehicle provided during warranty period is an input service for the manufacturer i.e. the appellant in this case. Therefore, we do not find any merit in the impugned order, the same is set-aside.”
• Further, this Tribunal in various decisions relied upon by the appellant on identical issues has consistently held that the assessee is entitled to cenvat credit of service tax paid on Repair and Maintenance during the warranty period as the same fall within the ambit of ‘Input Service’ as provided in Rule 2(l) of CCR, 2004.
• Hence the impugned order is not sustainable and the appeal is allowed.