Tribunal Grants Cenvat Credit for After-Sale Services

The Tribunal allowed the appeals, setting aside the order-in-original. It held that the appellant is entitled to avail Cenvat credit on after-sale service, warranty services, renting of common civil infrastructure services, and commission to print media agents. The demand was barred by the period of limitation, and the imposition of personal penalties on the employees was not warranted.

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Issues Involved:
1. Denial of Cenvat credit on after-sale service and warranty services.
2. Denial of Cenvat credit on service tax paid on renting of common civil infrastructure services.
3. Denial of Cenvat credit on service tax paid on commission to print media agents.
4. Invocation of the extended period of limitation for the demand.
5. Imposition of personal penalties on the employees of the appellant.

Issue-wise Detailed Analysis:

1. Denial of Cenvat Credit on After-Sale Service and Warranty Services:
The appellant argued that the repair and maintenance services received from authorized service stations should be eligible for Cenvat credit. The Tribunal noted that the free after-sale service coupons and warranty services are part of the assessable value of the motorcycles and scooters. The Tribunal referred to the case of Carrier Airconditioning & Refrigeration Ltd. vs. CCE, Gurgaon, which held that services provided by authorized service stations are on behalf of the manufacturer, and the service tax paid on such services is eligible for Cenvat credit. Consequently, the Tribunal concluded that the appellant is entitled to avail Cenvat credit on these services.

2. Denial of Cenvat Credit on Service Tax Paid on Renting of Common Civil Infrastructure Services:
The appellant contended that the common infrastructural facilities such as roads, water supply, and boundary walls are essential for manufacturing activities. The Tribunal agreed that these facilities are integral to the manufacturing process and are covered under the "inclusive" clause of the definition of "input service." The Tribunal also noted that the services availed by the appellant are not under the exclusion clause of Rule 2(l)(A) of the Cenvat Credit Rules. The Tribunal relied on the decision in CCE, Raigad vs. Heidelberg Cement India Ltd., which allowed credit on such services. Therefore, the Tribunal held that the appellant is entitled to Cenvat credit on the service tax paid for renting these infrastructural facilities.

3. Denial of Cenvat Credit on Service Tax Paid on Commission to Print Media Agents:
The appellant argued that the commission paid to print media agents for advertising services should be eligible for Cenvat credit. The Tribunal examined the invoices and noted that the commission paid to the agents is for the service of booking advertisements, and the service tax is charged on this commission. The Tribunal referred to the case of Indian Oil Corporation Ltd. vs. CCE, Mumbai, which held that the service tax paid on advertising services is eligible for Cenvat credit. The Tribunal concluded that the appellant is entitled to avail Cenvat credit on the service tax paid on the commission to print media agents.

4. Invocation of the Extended Period of Limitation for the Demand:
The appellant contended that the demand is barred by the extended period of limitation as there was no suppression, fraud, collusion, or misrepresentation. The Tribunal noted that all material facts were available with the Department, and the appellant was regularly audited. The Tribunal concluded that the necessary elements for invoking the extended period of limitation were not present in this case. Therefore, the demand is barred by the period of limitation.

5. Imposition of Personal Penalties on the Employees of the Appellant:
The appellant argued that the imposition of personal penalties on the employees under Rule 26 of the Central Excise Rules, 2002, was not warranted. The Tribunal held that since the demand itself is not sustainable, the grounds for imposing personal penalties are non-existent. Therefore, the penalties imposed on the employees were set aside.

Conclusion:
The Tribunal allowed the appeals on all counts, setting aside the order-in-original. It held that the appellant is entitled to avail Cenvat credit on after-sale service and warranty services, renting of common civil infrastructure services, and commission to print media agents. The demand was also barred by the period of limitation, and the imposition of personal penalties on the employees was not warranted.

(Order pronounced in open court on 13/12/2018.)

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