CENVAT CREDIT ON SERVICE TAX PAID ON WARRANTY SERVICE

[Asked by Guest]

Dear Sir.

we are the manufacturer of small commercial vehicles and we are selling our vehicles to our authorized dealers. As a condition of sale the dealer is giving free warranty service to end customers and for which dealer is recovering cost of service along the with service tax from us(Manufacturer)

• Can we avail cenvat credit on dealer bill  
• we have taken marine insurance policy which is covering all vehicles sold to dealers in transit. we are recovering the premium amount proportionately from the dealer through billing. can we take the service tax cenvat credit on insurance premium paid for marine policy.
• manufacturer has warranty failed parts in their factory and again sending those warranty failed parts to original supplier for analysis purpose (Reason of failure). while sending those failed parts from our factory (Manufacturer) shall we need to pay excise duty on this.

Please suggest on this.

Regards

RAMAPPA SOMAKKALAVAR

[YAGAY and SUN]

CENVAT credit will be available to you as per the provision of the Cenvat Credit Rule, 2004 as amended from time to time.

[CASeetharaman KC]

You can avail Cenvat Credit as per the provisions of Cenvat Credit Rules as these are genuine expenses incurred for business purposes

AI Summary

Cenvat credit entitlement for service tax on dealer warranty and insurance recoveries affirmed; excise duty not attracted on failed parts.
Cenvat credit is available on service tax paid where manufacturers reimburse dealers for warranty services and on pro rata marine insurance premiums recovered from dealers, provided these are genuine business expenses and compliance with Cenvat Credit Rules, 2004 (invoicing, payment trail, and eligibility conditions) is ensured. Sending warranty-failed parts to suppliers for analysis does not attract excise duty if the movement is for investigation and records show it is not a removal for sale.