2014 (10) TMI 306 - AT - Central Excise

Cenvat Credit - Input services - general insurance services - Held that - Insurance premium on vehicles owned by them either for transportation their employees or for transportation of goods which was an integral part of business of appellant firm and input service credit will be available. Accordingly service tax paid on insurance premium of such vehicles was a input service as defined under rule 2(i) of Cenvat Credit Rules 2004. Considering the facts on the matter in its broader contour Input service credit will be available on insurance of vehicles. Necessary documentary evidence and other factual information has not been provided by the appellants. Without proper information/documents it is not possible to decide the matter at this end. Both sides agree that justice will be met if matter is remanded back to original adjudicating authority to re-examine the matter. For this both sides are directed to provide necessary documents/information to the adjudicating authority. So that matter is examined afresh to consider eligibility of input service credit on services other than vehicle insurance - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Allowance of Cenvat Credit on specific input services.
2. Disallowance of Cenvat Credit on certain input services.
3. Interpretation of 'input service' under Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Allowance of Cenvat Credit on specific input services
The Commissioner (Appeals) allowed the Cenvat Credit on Insurance of Workman Compensation, Cash in Transit policy, and Insurance of Electric Weighbridge. The appellant cited precedents like U.G. Sugar & Industries Ltd. and Manikgarh Cement to support their claim that service tax paid on insurance premium for vehicles used in business activities qualifies as an 'input service' under Rule 2(1) of Cenvat Credit Rules, 2004. The Tribunal agreed with this argument, emphasizing that service tax on insurance premium for vehicles integral to business activities is eligible for input service credit.

Issue 2: Disallowance of Cenvat Credit on certain input services
However, the Commissioner (Appeals) disallowed the Cenvat Credit on input services like Vehicle Policy, Gun Insurance Policy, Sugar Stock, Fidelity Guarantee Bima Policy, and Computer & Vehicle policy. The appellant contended that services such as Fidelity Guarantee Bima Policy, Computer & Gun Insurance Policy are integral to business activities and should be considered as 'input services.' The Departmental Representative supported the Commissioner's decision to disallow credit on these services.

Issue 3: Interpretation of 'input service' under Cenvat Credit Rules, 2004
Upon hearing both sides, the Tribunal referred to the case law of M/s Manikgarh Cement Vs. Commissioner of Central Excise & Customs, Nagpur, where it was established that insurance premium on vehicles used for business purposes qualifies as an 'input service.' The Tribunal directed a remand back to the original adjudicating authority for re-examination of the eligibility of input service credit on services other than vehicle insurance, such as Sugar Stock, Gun Insurance policy, Fidelity Guarantee Bima Policy, and Computer Policy. Both parties were instructed to provide necessary documents and information for a fresh examination of the matter within three months.

In conclusion, the Tribunal upheld the allowance of Cenvat Credit on insurance premiums for vehicles used in business activities but remanded the case back for further examination regarding the eligibility of input service credit on other specified services.