2014 (12) TMI 791 - AT - Service Tax

Denial of cenvat credit - service tax paid by the insurance providers on various insurance policies taken out by the appellant - insurance policy has another address - Held that - Insurance of plant and machinery, company s vehicles, cash in box and in transit at various counters etc. and the services provided in relation to the business activity of an assessee. On merits, I find that appellant has made out a case that they are eligible for availment of such cenvat credit of the service tax paid on the insurance policies taken out for plant and machinery, cash in transit, cash in hand etc. Second address mentioned in the insurance policy is also of the same assessee. It was claimed by the appellant assessee before the lower authorities that the second address indicated in the insurance policy is nothing but an open plot purchased and allotted to them by GIDC vide allotment letter dated 12.10.2010. On perusal of the records, I find that the premium paid on the insurance policies were prior to the allotment and in the said allotment letter it is specifically indicated that the appellants were handed over an open and vacant plot by the GIDC for further constructions. Be that as it may, since the open and vacant plot is also of the same assessee, even if the insurance policy covers the said plot, denial of cenvat credit of service tax paid seems to be not in consonance with the law. Appellant is eligible to avail cenvat credit and the impugned order to that extent is incorrect and is liable to be set-aside and I do so. Since I allowed the appeal of the appellant upholding reversal of small amount, there is no necessity of visiting the appellant of any penalty - Decided in favour of assessee.

Summary

Issues Involved:
Denial of cenvat credit on service tax paid by insurance providers for various policies.

Analysis:
The appeal was against the denial of cenvat credit of Rs. 2,60,599/- on service tax paid by insurance providers for policies taken by the appellant. The lower authorities contested the availment of credit, citing that the address in the insurance policy included another address not directly related to the manufacturing activity of the appellant. However, the appellant argued that the insurance policies covered plant and machinery, cash in transit, and other business-related aspects. The Tribunal referred to previous cases where cenvat credit on insurance services was deemed eligible for business activities.

The Tribunal found that the insurance policies covered activities related to the appellant's business, making them eligible for cenvat credit. Even though a second address was mentioned in the policy, it was clarified that the address was an open plot allotted to the appellant for future construction, making it part of the same entity. The Tribunal noted that the denial of cenvat credit based on the second address was not in line with the law.

The appellant had claimed a refund of Rs. 28,681/- from the insurance companies, which the Tribunal acknowledged. The appellant agreed to reverse this amount, and the Tribunal directed them to do so within 30 days, along with paying interest. However, for the remaining amount of Rs. 2,31,918/-, the Tribunal held that the appellant was eligible for cenvat credit. The impugned order was set aside, and the appeal was allowed without imposing any penalty on the appellant.