Warranty-related repair and maintenance services can qualify as input service credit when directly linked to manufacturing obligations.

Warranty-related repair and maintenance services linked to the supply of parts during the warranty period were treated as eligible input services for Cenvat credit. The reported reasoning was that the warranty obligation arose directly from the assessee's manufacturing activity, so the absence of a factory nexus did not justify denial on the facts. The objection that the services were used beyond the place of removal was also rejected, since input services are not confined to the factory or place of removal and the exclusion cited did not apply to a supplier of parts and components. Credit on the warranty claims was therefore admissible.

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Issues: Whether credit of service tax paid on warranty-related repair and maintenance services was admissible as input service credit under the Cenvat Credit Rules, 2004, and whether such services were excluded on the ground that they were availed beyond the place of removal.

Analysis: The warranty-related repairs and maintenance were undertaken in connection with the supply of parts during the warranty period, and the credit was taken on service tax paid on those services. The denial based on absence of nexus with manufacturing was not sustained on the facts, since the warranty supply obligation was directly connected with the appellant's manufacturing activity. The objection that the services were used beyond the place of removal was rejected because input services are not confined to the factory or to the place of removal, and the exclusion relied upon was held inapplicable to the appellant, who was a supplier of parts and components and not a manufacturer of motor vehicles.

Conclusion: The disallowance of input service credit on warranty claims was unjustified, and the credit was held admissible in favour of the assessee.

Ratio Decidendi: Warranty-related repair and maintenance services that are integrally connected with the supply obligation arising from manufacture are eligible input services, and credit cannot be denied merely because such services are performed outside the factory or place of removal unless a specific exclusion squarely applies.

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