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2017 (1) TMI 695 - AT - Central ExciseCenvat Credit - Insurance services - demand on the ground that the activities carried out by the appellant fall within the category of welfare activities and insurance services broadly cover the companies property against exigencies such as fire and the said services are not input services used in or in relation to the manufacture or for furtherance of business - Held that - this issue is no more res integra and has been held in favor of the appellant in the case of CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT , where it was held that merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessee is not entitled to the benefit of CENVAT credit - credit allowed - appeal allowed - decided in favor of appellant.
Issues:
- Appeal against rejection of CENVAT credit on certain insurance services - Interpretation of input services under CENVAT Credit Rules, 2004 - Application of precedents in similar cases Analysis: Issue 1: Appeal against rejection of CENVAT credit on certain insurance services The appeal was filed against the Commissioner (A)'s order upholding the rejection of the appellant's appeal and confirming the demand for irregular CENVAT credit on insurance services. The appellant, a manufacturer of paint and varnishes, availed CENVAT credit on various insurance services. The Commissioner (A) held that these services did not qualify as input services used in or in relation to the manufacture or business. The appellant challenged this decision, arguing that the insurance services were essential for the smooth running of the business, especially due to the hazardous nature of their manufacturing activities. The appellant contended that the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004, is broad and includes services used in or in relation to the business, contrary to the narrow interpretation applied by the Commissioner (A). Issue 2: Interpretation of input services under CENVAT Credit Rules, 2004 The appellant's argument centered around the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004. The appellant emphasized that the definition is wide and encompasses services used in or in relation to the business, not limited to those required for production alone. The appellant cited precedents such as CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd., Coca Cola India (P) Ltd. vs. CCE, Pune-II, and CCE, Hyderabad-IV vs. Deloitte Tax Services India (P) Ltd. to support their position. These cases highlighted the importance of considering services necessary for the business, even if not explicitly mentioned in the definition of input services. Issue 3: Application of precedents in similar cases The Tribunal referred to the decision in Stanzen Toyotetsu India (P) Ltd. where the High Court of Karnataka held that insurance services, including those covering employees' health and safety, constitute input services related to the business. The Court emphasized that the CENVAT Credit Rules, 2004, allow credit for services utilized directly or indirectly in or in relation to the final product. Relying on this precedent, the Tribunal concluded that the impugned order was not sustainable in law and set it aside in favor of the appellant. The decision highlighted the importance of considering the broader business context when determining the eligibility of services for CENVAT credit. In conclusion, the Tribunal's judgment favored the appellant, emphasizing the broad interpretation of input services under the CENVAT Credit Rules, 2004, and the relevance of precedents supporting the inclusion of essential business-related services for claiming CENVAT credit.
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