APPLICOMP INDIA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS application filed by the appellant seeks waiver and stay against the adjudged dues including an amount of over Rs. 1.6 crores being the Cenvat credit denied to the appellant on "Warranty Service" for the period from April, 2008 to March, 2010. From the facts of the case, it appears that M/s. Videocon Industries Ltd. were providing 'warranty services' to the customers of the appellant and that the appellant took Cenvat credit to the aforesaid extent on such warranty services provided by M/s. Videocon Industries Ltd. The adjudicating authority has disallowed this credit to the appellant on the ground that the warranty services did not have any nexus with the manufacture and clearance of the appellant's products. In other words, the warranty services were held to be outside the purview of "input service" defined under Rule 2(1) of the Cenvat Credit Rules, 2004. The learned counsel for the appellant submits that there are decisions of the Tribunal which go to support the appellant's claim of Cenvat credit. In this connection, reliance is placed on Commissioner of Central Excise, Nasik v. Mahindra & Mahindra Ltd. - : 2012 (28) S.T.R. 382 (Tri. -Mum.), as also on Stay Order No. S/580/2012/EB/C -II, dated 29 -2 -2012 passed by the same Bench in the case of MIRC Electronics Ltd. v. Commissioner of Central Excise, Thane -I (Appeal No. E/1401/2011). We have also heard the learned Commissioner (AR) who refers to the definition of 'input service' and submits that the appellant cannot claim Cenvat credit on warranty services which were provided to their customers by third party much beyond the date of clearance of the goods as also beyond the place of removal. It is his submission that there is no requisite nexus between the warranty services and the manufacture and clearance of products from the appellant's factory.

(2.) AFTER giving careful consideration to the submissions, we are inclined to follow the ratio of the decision in Mahindra & Mahindra Ltd. case (supra) wherein this Tribunal held that, as per the terms of relevant contract, the assessee was under obligation to repair and maintain the transformers manufactured and cleared by M/s. Danke Products and, hence, they were entitled to Cenvat credit on the said service rendered during the warranty period. It is also not out of place to mention that the warranty service was undisputedly one attached to the very sale/clearance of the equipments by the appellant. It can, therefore, be reasonably argued that the warranty services, though provided after the clearance of the goods from the factory, had a certain nexus with the sale/clearance of the goods itself. It is, therefore, arguable that the provision of warranty services by M/s. Videocon Industries Ltd. to the customers of the appellant in terms of the contract of sale between the appellant and their customers can be considered to be covered by the definition of 'input service'. In the above prima facie view of the matter, we grant waiver of pre -deposit and stay of recovery as prayed for.