2016 (9) TMI 325 - AT - Service Tax

Cenvat credit - input services - used for insuring plant and machinery, building stock and other assets to cover up the risk of damage which may occur due to fire, burglary etc. - Held that - I observe that the reliance placed by the Commissioner (Appeals) on the decision of the Apex Court in Maruti Suzuki case law and the Sundaram Brake linings case law is inapplicable since the decision in Maruti Suzuki is no longer a good law in view of the decision of the larger Bench of the Hon ble Supreme Court in the case of Ramala Sahkari Chini Mills ltd vs. CCEx Meerut I 2016 (2) TMI 902 - SUPREME COURT and also the decision of this Tribunal in Sundaram Brake Linings is reversed by the Hon ble High Court of Madras in the case of The Commissioner of Central Excise, Chennai III Commissionerate Versus M/s. Visteon Powertrain Control Systems (P) Limited, Customs, Excise & Service Tax Appellate Tribunal 2015 (3) TMI 736 - MADRAS HIGH COURT . By following the decision of the Tribunal in the case of Sundaram Clayton Ltd. Vs CCE 2016 (6) TMI 161 - CESTAT CHENNAI , DCW Ltd. Vs CCE 2015 (5) TMI 973 - CESTAT CHENNAI and CCE Vs India Cements 2011 (2) TMI 786 - CESTAT, CHENNAI , wherein it was held that insurance service protects raw materials and finished goods in transit as well assets of the company, for which credit cannot be denied for availing this service, the appellants are entitled to cenvat credit on the insurance services used for insuring plant and machinery, building, stock and other assets of the appellant. Imposition of interest and penalty - employee insurance services involving an amount of ₹ 10,442/- - appellant has already reversed the credit availed - Held that - appellants have admitted the liability on Employee Insurance Service involving an amount of ₹ 10,442, the same is upheld. However, since there is no dispute that they had sufficient brought forward balance in their credit account which was not utilized, there is no reason to levy interest on the unutilized credit. Similarly, there is no evidence on record that appellant had intent to avail ineligible credit, Therefore, no penalty is imposable. The amount of ₹ 10,442/- is confirmed and the interest and penalty are set aside. - Decided in favour of appellant

Summary

Issues Involved:
1. Eligibility of cenvat credit on insurance services for plant and machinery, building stock, and employee insurance.

Analysis:

Issue 1: Employee Insurance Service Credit
The appellant admitted the liability for availing credit on employee insurance service but argued against the imposition of interest and penalty. The counsel contended that interest is not payable as the credit was not utilized due to sufficient brought forward balance. Citing case laws, it was argued that since there was no intention to avail ineligible credit and no loss incurred by the department, no penalty should be imposed. The tribunal upheld the liability but set aside interest and penalty due to lack of evidence of intent to avail ineligible credit.

Issue 2: Insurance Service Credit for Plant and Machinery
The appellant claimed cenvat credit on insurance services for plant and machinery, building stock, and other assets. The counsel submitted that the service was eligible as per the Cenvat Credit Rules, 2004, and previous orders accepted by the department. The tribunal noted that the department could not take a contrary stand on settled issues. Citing relevant case laws, the counsel argued for the eligibility of the service. The tribunal held in favor of the appellant, allowing the cenvat credit on insurance services and setting aside the demand, interest, and penalty. The decision was based on the protection provided by insurance services to safeguard business assets.

In conclusion, the tribunal upheld the recovery of cenvat credit on employee insurance while setting aside interest and penalty. It also allowed the cenvat credit on insurance services for plant and machinery, setting aside the demand, interest, and penalty. The appeal was allowed accordingly.