2017 (2) TMI 318 - AT - Service Tax

CENVAT credit - various types of insurance policies - policies taken by appellant are in respect of various machineries, tugs, vessels etc and also for public utility insurance for more than one unit situated in different locations under a single policy - Held that - all these insurance policies which have been taken by appellant are connected with the activity of the appellant i.e. manufacturing of Hot Iron and Sponge Iron on which appellant discharges Central Excise duty as applicable - reliance placed in the case of Commissioner of Central Excise, Bangalore-III, Commissionerate Versus Stanzen Toyotetsu India (P.) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of CENVAT credit on service tax paid for various insurance policies.

Analysis:

The appeals were directed against an Order-in-Appeal dated 01.05.2012. The issue under consideration was the denial of CENVAT credit on service tax paid for different types of insurance policies availed by the appellant during April 2010 to March 2011. The insurance policies included Marine Hull Policy, Public Utility Insurance Policy, Standard Fire and Special Perils Policy, Burglary Standard Insurance Policy, Marine Cargo Open Policy, Industrial All Risk Insurance Policy, Marine War Insurance Policy, Money Insurance Policy, and Contractors Plant and Machinery Insurance Policy.

The lower authorities had issued show-cause notices denying the CENVAT credit, stating that the activities were not integrally connected with the appellant's business. The adjudicating authority confirmed the denial of credit, leading to a demand for payment along with interest and penalties. The appellant argued that similar issues had been decided in their favor by the Hon'ble High Court of Karnataka and the Commissioner (Appeals) for a subsequent period.

After hearing both sides, it was observed that the insurance policies were related to the appellant's business activities, such as manufacturing Hot Iron and Sponge Iron. The Tribunal noted that the appellant discharged Central Excise duty on these manufactured goods. The Tribunal referenced various case laws to support their decision, including CCE v. Stanzen Toyotetsu India P.Ltd. and other relevant judgments. Consequently, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeals with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, overturning the denial of CENVAT credit on service tax paid for the insurance policies. The decision was based on the connection between the insurance policies and the appellant's manufacturing activities, as well as the precedents set by previous judicial pronouncements.