CENVAT credit of Excise Duty allowable to Warranty and AMC services provided by a common service provider as common input services for both manufacturing unit and corporate office: CESTAT [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the warranty and Annual Maintenance Contract (AMC) service provided by a common service provider as common input service for both manufacturing unit and corporate offices are entitled to CENVAT credit of excise duty. 

Acer India Private Limited, the appellant assessee was engaged in the manufacture of computer/Automatic Data Processing Machines falling under the Central Excise Tariff Act, 1985, and are registered with the Central Excise Department and the assessee were availing CENVAT Credit of duty paid on inputs and service tax paid on input services in terms of CENVAT Credit Rules (CCR) 2004. 

The assessee appealed against the order passed by the adjudicating authority for confirming the recovery of wrongly availed credit, along with interest and for imposing penalties. 

Lakshmikumaran and R. Charulatha, the counsels for the assessee contended that the Manufacturing unit of the assessee receives certain input services directly and takes credit of service tax paid on such input services. Apart from this, the Manufacturing unit also takes credit based on Input Service Distributor (ISD) invoices issued by the corporate office. 

R. Rajaraman, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was wrongly availed of the CENVAT credit and was liable to be reversed. 

The Bench observed that the Authorised Service Providers (ASP) provide both warranty and AMC services. For this purpose, they raised an invoice on which service tax was paid by the corporate office of the assessee, and the invoice was raised without any distinction between warranty and AMC services. 

Also observed that the warranty and AMC services provided by a common service providers (ASPs) are common input services for both the manufacturing unit and the corporate office and credit was proportionately distributed in the manner prescribed under Rule 7 of the CCR. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) quashed the CENVAT credit demand while allowing the appeal filed by the assessee. 

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