2013 (3) TMI 475 - AT - Central Excise

Availing Cenvat Credit of on input service - Post manufacturing activity - Definition of Input service - Held that - There is a clear nexus between these expenses with the goods manufactured by the appellant. Therefore, the said Insurance Services are used by the appellant only in relation to activities relating to their business of manufacture of final products. So the service tax paid on such input service is eligible for taking cenvat credit. The present case is covered under the Tribunal s decision in the case of M/s. Reliance Industries Ltd. v. C.C.E., Rajkot reported in 2009 (14) S.T.R. 287 (Tri. - Ahmd.)

Summary

Issues:
- Interpretation of "input service" under Cenvat Credit Rules, 2004 regarding service tax on insurance policy.
- Admissibility of cenvat credit for insurance services used in relation to business activities.

Analysis:
1. The appellant, engaged in manufacturing bearing cages, availed cenvat credit on service tax paid for an insurance policy. The Revenue objected, claiming it pertained to post-manufacturing activities and was not an input service for manufacturing final products. The Commissioner (Appeals) denied the credit, leading to the appeal. The appellant argued that the insurance expenses were directly or indirectly related to the manufacture of their final products, thus eligible for cenvat credit. They contended that the insurance cover had a direct nexus with their manufactured goods, making the service tax on the insurance policy an "input service" under the Cenvat Credit Rules, 2004.

2. The appellant cited the case of M/s. Reliance Industries Ltd. v. C.C.E., Rajkot, where the Tribunal held that activities relating to business are covered under the definition of "input service." The Tribunal's decision in Manikgarh Cement supported the inclusion of such activities as input services. By following these precedents, the appellant argued for the admissibility of cenvat credit for insurance services used in relation to their business activities. The Tribunal found the case sustainable based on legal pronouncements and allowed the appeal, emphasizing the wide scope of the definition of "input service" to include business-related activities.

In conclusion, the Tribunal upheld the appellant's claim for cenvat credit on service tax paid for an insurance policy, considering it an eligible input service directly related to their manufacturing business activities. The judgment highlighted the broad interpretation of "input service" under the Cenvat Credit Rules, 2004, encompassing expenses necessary for business requirements and having a clear nexus with the manufactured goods. The decision aligned with previous legal precedents supporting the inclusion of business-related activities as admissible input services, ultimately allowing the appeal on 2-12-2011.