2012 (11) TMI 601 - AT - Central Excise

Cenvat credit - input service Held that - Appellant has used the vehicles owned by them either for transportation of their employees or for transportation of goods which is an integral part of the business of appellant-firm. Therefore, the service tax paid on the insurance premium of such vehicles is an input service as defined under Rule 2(l) - insurance of vehicle is in relation to the maintenance of the vehicles and is eligible for credit as input service

Summary

Issues:
- Availment of CENVAT credit on service tax paid on insurance for vehicles owned by the appellant.

Analysis:
The issue in this case revolves around the eligibility of CENVAT credit on service tax paid on insurance for vehicles owned and used by the appellant. The Commissioner of Customs & Central Excise denied the CENVAT credit, stating that maintaining and running vehicles is not related to manufacturing activity. The appellant contended that as per Rule 2(1) of the CENVAT Credit Rules, 2004, services used in relation to business activities, including maintenance of vehicles used for transporting employees or goods, qualify as 'input services.' The appellant argued that such services are integral to their business and should be eligible for CENVAT credit. The appellant also cited previous Tribunal judgments supporting the eligibility of service tax paid on vehicle insurance as an input service.

The Tribunal considered the definitions and scope of 'input service' under Rule 2(1) of the CENVAT Credit Rules, 2004, which encompass activities related to the business of the manufacturer or service provider. The Tribunal noted that the vehicles owned by the appellant were used for transporting employees or goods, essential aspects of the appellant's business operations. Therefore, the service tax paid on insurance for these vehicles qualifies as an 'input service' under Rule 2(1). The Tribunal referred to a previous decision involving H.E.G. Ltd., which concluded that vehicle insurance is related to vehicle maintenance and is eligible for credit as an 'input service.'

In conclusion, the Tribunal allowed the appeal, granting relief to the appellant based on the precedent set by the previous decision. The Tribunal upheld that the service tax paid on insurance for vehicles owned and used by the appellant is indeed an 'input service' eligible for CENVAT credit.