Product Recall Policy Expenses eligible for Cenvat Credit: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the expenses towards product recall policy expenses are eligible for cenvat credit.

The appellant, Bhavani Industries, approached the Tribunal challenging the decision of the authorities rejecting their claim for cenvat credit. It was contended before the Tribunal that the issue involved in the Cenvat Credit in respect of Product Liability and Product recall insurance policy and the Tribunal has already decided the matter in favor of the appellant in the case reported as M/s. Bhavani Industries V/s. C.C.E. & S.T. Rajkot.

Judicial Member Ramesh Nair observed that the Tribunal, in the above-said case, held that the Product Recall Policy expenses is born for the purpose of security of the goods. Therefore, for his reason also the service falls under the definition of input services.

The Tribunal, while deciding the issue in favor of the appellant in the view of the above Tribunal decision, held that “as per my above discussion, I am of the considered view that the Service Tax paid in respect of product recall policy for the sale of the finished goods is eligible for Cenvat Credit. Hence, impugned orders are set aside. The appeals are allowed. In view of the above order which was passed in respect of the same appellant for the earlier period, the issue is no longer res-Integra.”

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