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2011 (3) TMI 963 - AT - Service TaxDemand - availment of cenvat credit on insurance service to cover the damage or loss to the goods exported - Commissioner (Appeals) while disposing off the appeal has not considered any of the above decisions of the Tribunal and has given a finding that the said service cannot be held to be an input service on the sole ground of the same being operative in a foreign country - Appeal is allowed by way of remand to Commissioner(A)
Issues: Availment of service tax paid on insurance service for goods exported, classification as input services, applicability of input service definition under Cenvat Credit Rules, 2004.
Analysis: The dispute in the present appeal revolves around the service tax paid on insurance service for goods exported by the appellant. The lower authorities denied the credit, stating that the insurance policy covering goods in foreign countries, excluding India, cannot be considered as input services as per Rule 2(1) of Cenvat Credit Rules, 2004. The Commissioner (Appeals) emphasized that the insurance coverage did not extend to goods within India up to the boarding of cargo at the ship, leading to the denial of Cenvat credit. The Commissioner's decision was based on the argument that since the insurance did not cover goods manufactured in India, it did not qualify as an input service. The appellant argued that the term "input service" has a wide connotation and should encompass services related to the business activities of the appellant. Citing various decisions, the appellant contended that input services should be considered admissible for input credit as long as they are linked to business activities. On the contrary, the Departmental Representative (DR) relied on specific Tribunal decisions to support the denial of credit based on the foreign operational scope of the insurance service. The Tribunal noted that the Commissioner (Appeals) did not consider the precedents cited by both parties. Consequently, the Tribunal remanded the matter back to the Commissioner (Appeals) for a fresh decision, instructing a reevaluation in light of the case laws referenced during the appeal. The Tribunal's decision highlighted the need for a comprehensive review of the case to determine the admissibility of the service tax credit on the insurance service for goods exported by the appellant.
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