Input on Freight out during Warranty Supply

[Guest]

Dear All,

 

We have an issue, we are the manufacturer of Equipments.

After the Sales of equipments we will supply warranty replacement to the customer at free of cost.

We charge the Excise on the goods and send the material with Freight Paid basis.

On the Freight we will avail the Service Tax Credit since the customer does not pay on the material as well as on the Freight .

The question is shall we avail the credit on freight out. also note that the ownership of the material is in our account.

Kindly request your feed back on the above.

Thanks

Srikanta

 

[Madhukar N Hiregange]

The credit shouldbe allowed as warranty is included in the original price. Maybe advisable to avail after intimation in writing to revenue under speed post.

[Mahir S]

Service tax credit for freight outward transportation is available only upto the place of removal.

AI Summary

Input service credit on freight outward may be available for warranty replacements, subject to a place-of-removal limitation. Whether input service credit is allowable on freight for warranty replacement supplies sent freight-paid, where the manufacturer charges excise and bears freight and the customer pays nothing, is contested: one view permits credit because warranty is included in the original price (with recommendation to intimate revenue in writing), while another view limits service tax credit for outward transportation to the place of removal.