Cenvat credit in services at o value

Shuvam Banerjee (Audit Manager) (39 Points)

16 November 2012  

My company is leading Home Appliance manufacturer providing warranty for 1 to 4 years. During the warrnty period spares are used to rectify the machines and we are utilising the Cenvat on the same against our Service Tax liability. Query has been raised by the Department as whether we can Cenvat Credit on the Spares during the Warranty period though we are not  charging any amount from the customers during ther warranty period. The department has accepted that the service is a taxable service. Advice.