2019 (2) TMI 253 – CESTAT CHENNAI – TMI – CENVAT Credit – input services – Product Liability Insurance – not post manufacturing activity – period April 2016 to March 2017 – Held that:- The appellants have taken such insurance policies to cover their losses in case finished products are defective and the customers claim for compensation – It is brought out that the insurance does not cover cost of removal, replacing or repair of defective products or losses of use but is only for malfunctioning or manufacturing defects, which is detected in the hands of the customers. These cannot be considered as post-manufacturing activities as they are integrally connected to the manufacture of finished products – credit cannot be denied – appeal allowed
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. In appeal, the Commissioner (Appeals) upheld the same. 2. Hence this appeal. 3. On behalf of the appellants, the learned counsel Shri Nitin submitted that the department has disallowed the credit alleging that these are post-manufacturing services. In fact, the Product Liability Insurance is availed by the appellants to cover the risk in case of defect of the finished products. The premium was paid for insurance on the finished products, namely, brake lining, clutch facings and railway brake blocks. In case, the appellants are not indemnified for defects of the finished products, they would incur huge
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rs claim for compensation. It is brought out that the insurance does not cover cost of removal, replacing or repair of defective products or losses of use but is only for malfunctioning or manufacturing defects, which is detected in the hands of the customers. These cannot be considered as post-manufacturing activities as they are integrally connected to the manufacture of finished products. The Tribunal in the appellant's own case as well as the decisions relied by the learned counsel has held the issue in favour of the assessee. Following the same as well as appreciating the facts of the case, I am of the view that the credit is admissible. Impugned order to this extent is set aside and appeal is allowed with consequential reliefs, if
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =