2016 (1) TMI 202 - AT - Central Excise

Cenvat Credit - input services - service tax paid on the services of insurance for their plant and machinery, inputs, finished goods, equipments, vehicles, insurance of residential building of factory/township etc. - Nexus with manufacturing activity - Held that - The factual findings of the adjudicating authority that the cost of the insurance as indicated in the valuation of the final products remain undisputed. We find that this Bench in the respondent-assessee s own case by order dated 15.10.2015 2015 (11) TMI 100 - CESTAT MUMBAI has relied upon various judgements of the Hon ble High Court of Bombay, and held that when the cost of any service is included to determine the valuation of the final product, CENVAT credit cannot be denied of such tax paid on the services. We do not find any reason to deviate from such a view already taken. - Credit allowed - Decided in favor of assessee.

Summary

Issues:
1. Additional grounds filed by Revenue for appeal disposal.
2. Similar issue in another appeal filed by the same respondent.
3. Eligibility of CENVAT credit on service tax paid by the respondent.
4. Dispute over insurance policies and their relation to manufacturing process.

Issue 1: Additional Grounds for Appeal
The Revenue filed an application for additional grounds in the appeal, seeking their consideration. The Tribunal found the additional grounds relevant and disposed of the miscellaneous application, allowing the new grounds to be taken into account for the appeal's disposal.

Issue 2: Similar Issue in Another Appeal
The Tribunal noted that an identical issue involving the same respondent was present in another appeal. After reviewing the file and finding the issue to be the same, the Tribunal allowed an out-of-turn hearing for the second appeal and decided to dispose of both appeals together.

Issue 3: Eligibility of CENVAT Credit
The dispute revolved around the respondent's eligibility to avail CENVAT credit on service tax paid to insurance companies for various services related to plant and machinery, inputs, goods, and buildings. The Revenue argued that the insurance did not directly relate to the manufacturing process and thus, the credit should be denied. However, the respondent contended that the cost of insurance was included in the final product's valuation, making them eligible for the credit.

Issue 4: Dispute Over Insurance Policies
The adjudicating authority had confirmed demands for recovery of CENVAT credit wrongly availed by the respondent. The Tribunal, in a previous order, had remanded the matter back to the authority for reconsideration. The Tribunal found that the adjudicating authority had accepted the Cost Accountant's certificates provided by the respondent, confirming the inclusion of insurance costs in the final product's pricing. As this fact remained undisputed and in line with previous decisions, the Tribunal upheld the impugned orders, rejecting the Revenue's appeals.

In conclusion, the Tribunal upheld the orders, emphasizing the inclusion of insurance costs in the final product's valuation as a valid basis for the respondent's eligibility to avail CENVAT credit.