2017 (1) TMI 1460 - AT - Service Tax

CENVAT credit - General Insurance Service - Rule 2(1) of CCR - Held that - Even after amendment in the definition of input service the General Insurance relating to the Marine Cargo and Fire and Burglary which are directly connected with the business are included in the definition of input service - the exclusion clause is only in respect of General Insurance pertaining to motor vehicle and not to other kinds of insurance such as Marine Cargo Open Policy, Standard Fire and Special Perils Policy, Burglary Floater Policy and other properties of the company - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of the definition of 'input service' under Rule 2(1) of Cenvat Credit Rules.
2. Eligibility of availing Cenvat credit on General Insurance Services.
3. Misinterpretation of the definition of 'input service' by the Commissioner (Appeals).

Analysis:

Issue 1: Interpretation of the definition of 'input service' under Rule 2(1) of Cenvat Credit Rules
The case involved a dispute regarding the interpretation of the definition of 'input service' under Rule 2(1) of Cenvat Credit Rules. The appellant contended that the impugned order misinterpreted the definition by excluding certain insurance services from the ambit of 'input service.' The appellant argued that the insurance services in question were directly related to business activities and thus eligible for Cenvat credit. The appellant relied on various judgments to support their interpretation of the definition.

Issue 2: Eligibility of availing Cenvat credit on General Insurance Services
The appellant had availed Cenvat credit on General Insurance Services, specifically related to Marine Cargo, Fire, and Burglary policies, among others. The appellant argued that these insurance services were integral to their business operations and should be considered as eligible for Cenvat credit. The appellant highlighted that the exclusion clause under the amended definition of 'input service' only pertained to motor vehicle insurance and not other types of insurance services.

Issue 3: Misinterpretation of the definition of 'input service' by the Commissioner (Appeals)
The Tribunal found that the Commissioner (Appeals) had misinterpreted the definition of 'input service' by excluding certain insurance services from the purview of Cenvat credit. The Tribunal held that even after the amendment to the definition, General Insurance Services related to Marine Cargo, Fire, and Burglary, which were directly linked to business activities, fell within the scope of 'input service.' The Tribunal concluded that the impugned order was not sustainable in law due to the misinterpretation of the definition and, therefore, allowed the appeal of the appellant with consequential relief.

In conclusion, the Tribunal set aside the impugned order dated 30-6-2014, confirming the demand of duty and penalty, and allowed the appeal of the appellant concerning the eligibility of availing Cenvat credit on General Insurance Services. The judgment emphasized the importance of correctly interpreting the definition of 'input service' under the Cenvat Credit Rules to determine the eligibility of specific services for Cenvat credit.