2010 (10) TMI 228 - AT - Service Tax

Input service credit - Insurance policy for workmen s compensation - Insurance policy has been taken for the workers who are involved in the manufacturing process to cover the risk for workers who are involved in the manufacturing of the final product - The Insurance Policy for Workmen s Compensation has been taken by the respondent to cover the risk of the workers who are involved in the manufacturing process of the final product - the respondents are entitled for Input Service Credit as per Rule 2(l) of the Cenvat Credit Rules - Decided in favour of assessee.

Summary

Issues:
- Appeal against allowing input service credit on insurance policy for workmen's compensation
- Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004

Analysis:
1. Appeal against Allowing Input Service Credit:
The Revenue filed an appeal challenging the Lower Appellate Authority's decision to allow input service credit on an insurance policy for workmen's compensation. Despite the small amount involved, the matter was taken up on merits as per the Revenue's pursuance. The Revenue argued that the insurance policy was not related to manufacturing activity, seeking denial of the credit under Rule 2(l) of the Cenvat Credit Rules, 2004.

2. Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004:
The respondent contended that the insurance policy for workmen's compensation was directly related to the manufacturing process. The policy was taken to cover the risks of workers involved in manufacturing the final product. The Tribunal carefully considered both sides' submissions and found merit in the respondent's argument. It was established that the insurance policy was obtained to cover the risks of workers directly involved in manufacturing, aligning with Rule 2(l) of the Cenvat Credit Rules, 2004.

3. Judgment:
After hearing the arguments, the Tribunal upheld the impugned order, stating that the insurance policy for workmen's compensation was indeed taken to cover the risks of workers involved in manufacturing the final product. Consequently, the respondents were deemed entitled to input service credit as per Rule 2(l) of the Cenvat Credit Rules. The appeal filed by the Revenue was rejected, and cross objections were disposed of accordingly. The judgment was dictated and pronounced in open court by Shri Ashok Jindal, JJ.