2013 (8) TMI 126 - AT - Central Excise

Cenvat Credit of insurance premium for insurance of company s vehicles Held that - Since it is not disputed that the vehicles are also used by the officials for company s work and since it is the Appellant company which benefits by arrival of its officials to the factory in time for which also the cars, in question, are used, providing of cars to the officers for company s work as well as for commuting between the residence and the factory cannot be called welfare activity and is to be treated as activity related to business and the judgments of the Tribunal, in the cases of Commissioner of Central Excise, Raipur Vs. Topworth Steels Pvt. Ltd. reported in 2012 (9) TMI 235 - CESTAT, NEW DELHI , DSCL Sugar Vs. Commissioner of Central Excise, Lucknow reported in 2012 (12) TMI 221 - CESTAT, NEW DELHI , would be applicable Decided in favor of Assessee.

Summary

Issues:
- Cenvat Credit eligibility on service tax paid for insurance of company's vehicles used by officials for commuting and work.

Analysis:
The judgment revolves around the dispute concerning the eligibility of Cenvat Credit for service tax paid on insurance of company-owned vehicles used by officials for commuting and company work. The Appellant, a manufacturer of Iron Castings, claimed the credit, contending that the vehicles were essential for officials' travel from residence to the factory and for other company-related tasks. The Department disagreed, asserting that such insurance did not qualify as a Cenvatable Service due to a lack of nexus with manufacturing activities. A Show Cause Notice was issued, leading to a demand confirmation by the Deputy Commissioner, upheld by the Commissioner (Appeals) and subsequently challenged in this appeal.

The Appellant's counsel cited precedents where similar scenarios were deemed covered by the definition of input service, emphasizing the practical necessity of officials commuting from Chandigarh to Ropar, where the factory was situated. The vehicles in question were utilized for company tasks, supporting the argument for Cenvat Credit eligibility. On the other hand, the departmental representative supported the previous decision.

Upon review, the judge acknowledged the central issue of whether the insurance of company-owned vehicles used for commuting and company work qualified for Cenvat Credit. Considering that the vehicles facilitated timely arrival of officials for business-related activities, the judge deemed the provision of cars as a business-related activity rather than a welfare measure. Drawing from relevant Tribunal judgments, the judge concluded that the impugned order denying Cenvat Credit was unsustainable. Consequently, the order was set aside, and the appeal was allowed.

In essence, the judgment clarifies the eligibility of Cenvat Credit on service tax paid for insurance of company-owned vehicles used by officials for commuting and work, emphasizing the business-related nature of such activities and aligning with established precedents.