Custom, Excise & Service Tax Tribunal
M/S Samsung India Electronics Pvt. Ltd vs Commissioner Of Customs Central Excise ... on 1 November, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH : ALLAHABAD
COURT No. I
APPEAL No. E/701/2011 & E/55880/2013-EX[DB] With
MISC Application No. E/MISC/70405/2016
(Arising out of Orders-in-Original No. 15-18/COMM/NOIDA/2010-11 dated 21/12/2010 & 39/COMMISSIONER/NOIDA/2012-13 dated 16/11/2012 passed by Commissioner of Central Excise & Customs, Noida)
For approval and signature:
Honble Mr. Anil Choudhary, Member (Judicial)
and
Honble Mr. Anil G. Shakkarwar, Member (Technical)
======================================================
1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No
2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes
3. Whether their Lordships wish to see the fair copy of the order? Seen
4. Whether order is to be circulated to the Department Authorities? Yes ====================================================== M/s Samsung India Electronics Pvt. Ltd. Appellant Vs. Commissioner of Customs Central Excise & Service Tax, Noida Respondent Appearance:
Shri Tarun Gulati, Advocate & Shri Nikhil Gupta, Advocate, for Appellant Shri Pawan Kumar Singh, Superintendent (AR), for Respondent CORAM:
Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing & Date of Decision : 01/11/2016 FINAL ORDER NO. 71058-71059/2016 Per: Anil G. Shakkarwar The present appeals are filed by the appellant, M/s Samsung India Electronics Pvt. Ltd., against Orders-in-Original No. 15-18/COMM/NOIDA/2010-11 & 39/COMMISSIONER/NOIDA/2012-13 dated 21/12/2010 & 16/11/2012 respectively passed by Commissioner of Central Excise & Customs, Noida.
2. Appeal No. E/701/2011 was allowed to be heard for early hearing through Misc. Order No. 70387/2016 dated 19/08/2016, wherein it was also ordered to tag Appeal No. E/55880/2013. Therefore, both the appeals are heard and being decided together. As a result MISC Application No. E/MISC/70405/2016 for early hearing of Appeal No. E/55880/2013 became infructuous and same is disposed as infructuous.
3. The appellants were engaged in the manufacture of Electronics & Electrical goods such as Computer Monitor, Refrigerator, Colour Television Sets, Washing Machines etc. The appellants were providing after sale service to their customers in respect of products sold by them through various Authorized Service Centers. The appellants used to bear the expenses incurred for providing service to customers during the warranty period of the product. The cost of services provided by Authorized Service Centers was reimbursed by the appellant. Authorized Service Centers used to pay Service tax and appellants used to take Cenvat credit of such Service tax paid by Authorized Service Centers. It appeared to Revenue that the services provided by Authorized Service Centers (ASCs) were not input services for the manufacture of goods manufactured and cleared by appellants. Therefore, it appeared to Revenue that Service tax paid by Authorized Service Centers was not input service for the manufacture of goods manufactured and cleared by them. Therefore, the appellants were issued with a Show Cause Notice dated 07/08/2008 with a proposal to recover Service tax credit amounting to Rs.1,83,21,957/- for the period from July, 2007 to May, 2008 under Rule 14 of Cenvat Credit Rules, 2004. Subsequently, for the period from June, 2008 to May, 2009 a Show Cause Notice on the same line was issued on 06/07/2009, proposing recovery of Service tax credit of Rs.1,28,83,144/- under Rule 14 of Cenvat Credit Rules, 2004. Subsequently, for the period from June, 2009 to October, 2009 another Show Cause Notice on the same line was issued on 10/05/2010 with a proposal to recover Service tax credit of Rs.66,98,367/- under the same provision of Rule 14 of Cenvat Credit Rules, 2004. Subsequently, for the period from November, 2009 to September, 2010 a Show Cause Notice on similar line was issued on 10/11/2010 proposing recovery of Service tax credit of Rs.70,05,198/-. The above stated four Show Cause Notices were adjudicated through Order-in-Original No.15-18/COMM/NOIDA/2010-11 dated 21/12/2010. The Original Authority has held that neither the services rendered by ASCs to the customers falls under the ambit of the definition of input service nor it was received by M/s Samsung India Electronics Pvt. Ltd. i.e. appellant and used or in relation to the manufacture or clearance of final product and, therefore, the said credit of Service tax was not admissible to the appellants. In view that the Original Authority confirmed the demand of Rs.4,49,08,666/- under Rule 14 of Cenvat Credit Rules, 2004. Subsequently, the appellants were issued with a Show Cause Notice dated 27/09/2011 on same lines covering period from October, 2010 to February, 20111 wherein it was proposed to recover Service tax credit amounting to Rs.78,63,975/- under Rule 14 of Cenvat Credit Rules, 2004. The said Show Cause Notice dated 27/09/2011 was adjudicated through Order-in-Original No. 39/COMMISSIONER/NOIDA/2012-13 dated 16/11/2012 wherein the Original Authority has ordered for recovery of Rs.78,63,975/- under Rule 14 of Cenvat Credit Rules, 2004. Aggrieved by Order-in-Original No.15-18/COMM/NOIDA/2010-11 dated 21/12/2010, the appellant has preferred appeal before this Tribunal which is bearing Appeal No. E/701/2011. Similarly, Order-in-Original No. 39/COMMISSIONER/NOIDA/2012-13 dated 16/11/2012 was challenged before this Tribunal through appeal which is bearing Appeal No. E/55880/2013.
4. Heard the ld. Counsel for the appellant who has argued that as held by Honble Supreme Court in the Case of Union of India & ORS. Versus Bombay Tyre International Ltd. reported at 1983 (14) E.L.T. 1896 (S.C.) the cost incurred towards providing warranty to the customers by the manufacturer is included in the assessable value of the goods manufactured by any manufacturer and that it is including the appellant. He has further submitted that it was held by this Tribunal in the case of Videocon Industries Ltd. Versus Commissioner of Central Excise, Aurangabad reported at 2016 (335) E.L.T. 778 (Tri. Mumbai) that since MRP includes warranty charges/warranty charges cannot be excluded from retail sale price for determination of assessable value over and above abatement made admissible through Notification issued under Sub-section 2 of Section 4A of Central Excise Act, 1944. He has further argued that definition of transaction value which is basis for valuation under Section 4 of Central Excise Act, 1944 with effect from 01/07/2000 provides that the amount charged for warranty is included in the price actually paid or payable for the goods sold and such price charged is transaction value. He has further taken us through the terms of contract between the appellant and Authorized Service Centers. The Authorized Service Centers had an obligation to repair all the goods manufactured and sold by appellant within the warranty period. The appellant also entered into agreements with the dealers was not allowed to give to the customers any warranty in respect of final products other than one which is given by the appellants. Further, the appellant issued Warranty Card to the customers wherein the clause included that the appellants provide Warranty for repair or providing replacement of parts during warranty period and thus three sets of agreements put together establishes that the warranty is provided by the appellants and actually operated through the Authorized Service Centers and for providing such service Authorized Service Centers used to raise invoice on the appellant and appellant reimbursed that amount and such invoice included Service tax paid by Authorized Service Centers which was borne by appellant. He, further, argued that the cost of warranty is included in the assessable value. Therefore, warranty is related to manufacture. The Authorized Service Centers were providing service towards fulfillment of legal obligation of warranty. Therefore, the Service tax paid by the Authorized Service Centers was input service for the manufacture of goods manufactured by appellants. He has further relied on this Tribunals Final Order Nos. A/388-389/2012-WZB/C-I(CSTB), dated 02/05/2012 in Appeal No. ST/43/2009 & E/1742/2010-Mumbai in the case of Commissioner of Central Excise, Nashik Versus Mahindra & Mahindra Ltd. reported at 2012 (28) S.T.R. 382 (Tri. Mumbai) wherein it has been held at Para 5.1 as follows:-
5.1 The first issue by the learned A.R. is that after sales service of the vehicle is not an input service on the ground that the service has been availed after sale of the vehicle and expenses incurred towards manufacture of the vehicle are entitled for input service credit. We have gone through the Section 4(3) of the Central Excise Act, 1944 which deals with the issue as hereinunder:-
(d) transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.
By Going through the said provision, we find that the transaction value means the price actually paid or which are payable for the goods when sold and those includes servicing and warranty also. Admittedly the service and warranty is post manufacturing expenses which are to be provided to the customer after sale. As per the provision of Section 4(3)(d) of Central Excise Act, 1944 the value of warranty and servicing which is a post manufacturing are includible in the assessable value and therefore, these expenses incurred in the service are entitled for input service credit.
5. The ld. A.R. has supported the impugned Orders-in-Original.
6. We have gone through the rival contentions. We find force in the arguments put forward by ld. Counsel for the appellants. We also find through the precedent judgment in the case of Commissioner of Central Excise, Nashik Versus Mahindra & Mahindra Ltd. reported at 2012 (28) S.T.R. 382 (Tri. Mumbai) wherein it was held that Service tax paid on the expenses incurred for providing warranty service were entitled for input service credit. Following the said final order, we allow these appeals and hold that the appellants shall be entitled for consequential reliefs, if any, in accordance with law. Miscellaneous Application bearing No. E/MISC/70405/2016 also stand disposed as infrcutuous.
(Dictated and pronounced in Court) Sd/- Sd/- (Anil Choudhary) Member (Judicial) (Anil G. Shakkarwar) Member (Technical) Ansari 1 8 Ex Appeal Nos. 701/11 & 55880/13 MISC Application No. 70405/16