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of <h1>CESTAT allows CENVAT credit for business services but denies AMC warranty charges lacking manufacturing connection</h1> <h3>M/s. Lenovo India Pvt. Ltd. Versus Commissioner of GST & Central Excise, Puducherry</h3> M/s. Lenovo India Pvt. Ltd. Versus Commissioner of GST & Central Excise, Puducherry - TMI ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the appellant is eligible to avail CENVAT credit on input services such as Management, Maintenance or Repair Services, Business Auxiliary Services, Import of Services, Club and Association Membership services, and Storing and Warehousing Charges.The eligibility of input service credit for services rendered beyond the warranty period, specifically regarding AMC and warranty charges.Whether the appellant can claim input service credit for Business Auxiliary Services given the retrospective acceptance of sales commission credit.The applicability of extended time limits for demanding reversal of CENVAT credit.ISSUE-WISE DETAILED ANALYSISAMC & Warranty Charges:Relevant legal framework and precedents: The definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004, was central to the dispute. The appellant cited several precedents, including Carrier Airconditioning & Refrigeration Ltd and Acer India Private Limited, to support their claim of eligibility for CENVAT credit.Court's interpretation and reasoning: The Tribunal concluded that AMC services for traded goods beyond the warranty period did not qualify as input services for the manufacturing unit at Puducherry. The Tribunal emphasized the need for a direct nexus between the input service and the manufacturing activity.Key evidence and findings: The absence of a distinct separation of charges for warranty and AMC services between the manufacturing unit and the head office rendered the credit ineligible.Application of law to facts: The Tribunal upheld the principle that input services must be integrally connected to the manufacturing process to qualify for CENVAT credit.Treatment of competing arguments: The appellant's argument that the definition of input service is inclusive was acknowledged, but the Tribunal maintained that eligibility requires compliance with the statutory scheme.Conclusions: The Tribunal sustained the demand for reversal of CENVAT credit related to AMC and warranty charges.Business Auxiliary Service:Relevant legal framework and precedents: The Tribunal considered the retrospective acceptance of sales commission credit based on a board circular.Court's interpretation and reasoning: The Tribunal noted that the demand for the period August 2015 to August 2016 had been dropped, and the department had not appealed against this order.Key evidence and findings: The Tribunal found that the issue had attained finality due to the absence of an appeal by the department.Conclusions: The Tribunal accepted the appellant's claim for CENVAT credit on Business Auxiliary Services.Import of Services and Blanks:Relevant legal framework and precedents: The Tribunal referred to Essar Steel India Ltd. to support the classification of market research and consultancy services as input services.Court's interpretation and reasoning: The Tribunal recognized these services as sales promotion activities, qualifying them as input services under Rule 2(l) of CCR 2004.Conclusions: The Tribunal allowed CENVAT credit for these services.Club and Association Membership Services:Relevant legal framework and precedents: The Tribunal referred to Reliance Industries Ltd. and ITC Ltd to support the appellant's claim.Court's interpretation and reasoning: The Tribunal acknowledged the legal precedent but noted the lack of specific evidence on the actual use of these services in the appellant's case.Conclusions: The Tribunal accepted the appellant's claim for CENVAT credit on these services.Storing and Warehousing Charges:Conclusions: Given the paltry amount involved and the absence of subsequent demands, the Tribunal allowed the credit.Extended Time Limit:Court's interpretation and reasoning: The Tribunal found no deliberate attempt to evade duty and noted that the appellant had disclosed the credit availed in their returns.Conclusions: The Tribunal set aside the demand for the extended period.SIGNIFICANT HOLDINGSThe Tribunal upheld the principle that input services must be integrally connected to the manufacturing process to qualify for CENVAT credit.The Tribunal accepted the appellant's claim for CENVAT credit on Business Auxiliary Services due to the finality of the issue in previous orders.The Tribunal allowed CENVAT credit for Import of Services and Blanks, recognizing them as sales promotion activities.The Tribunal accepted the appellant's claim for CENVAT credit on Club and Association Membership Services, despite noting the lack of specific evidence on their use.The Tribunal allowed the credit for Storing and Warehousing Charges due to the minor amount involved.The Tribunal set aside the demand for the extended period, finding no deliberate attempt to evade duty.
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