2012 (11) TMI 1025 - AT - Central Excise

CENVAT Credit - Insurance auxiliary service - Held that - The decision of the Hon ble Karnataka High Court on the question whether, on insurance services provided by insurance companies to manufacturers of excisable goods so as to cover various risks to the latter s employees, CENVAT credit could be claimed by the manufacturer is against the appellant and in favour of the respondent vide Stanzen Toyotetsu (2011 (4) TMI 201 - KARNATAKA HIGH COURT) and Millipore India (2011 (4) TMI 1122 - KARNATAKA HIGH COURT). In both the cases, the Hon ble High Court upheld the Tribunal s view which has been rightly followed in the impugned order - Decided against Revenue.

Summary

Issues:
Appeal against grant of CENVAT credit for insurance auxiliary service.

Analysis:
The appeal was filed by the department challenging the grant of CENVAT credit to the respondent for insurance auxiliary service. The respondent, engaged in the manufacture of bulk drugs, introduced a group insurance scheme covering employees' risks. The department denied the CENVAT credit, arguing that the service did not qualify as an input service under Rule 2(l) of the CENVAT Credit Rules 2004, considering it as a welfare scheme for directors and employees. The original authority disallowed the credit, but the Commissioner (Appeals) allowed it, citing various decisions including ITC Ltd. Vs. CCE, Hyderabad and others. The respondent also claimed support from these decisions in their written submissions.

In response, the department submitted that they had appealed against certain Tribunal orders and a High Court decision, seeking to discount their precedent value. However, the learned Superintendent (AR) acknowledged that appeals filed by the department in some cases had been dismissed by the Hon'ble Karnataka High Court. The bench noted that in a similar case involving the same assessee, the department's appeal had been decided against them based on previous Tribunal decisions, which were affirmed by the High Court. The respondent also relied on Commissioner Vs. Dr. Reddy's Laboratories Ltd. in their written submissions.

The Tribunal found a strong case for the respondent based on the decisions of the Hon'ble Karnataka High Court regarding the eligibility of manufacturers to claim CENVAT credit for insurance services covering risks to employees. The High Court upheld the Tribunal's view in cases like Stanzen Toyotetsu and Millipore India, which were followed in the impugned order. Consequently, the department's appeal was dismissed, affirming the decision in favor of the respondent.