2017 (11) TMI 151 - AT - Central Excise

CENVAT credit - input services - Life Insurance Policy of the employees - vehicles used for transportation of employees - Held that - similar issue decided in the case of Commissioner of Central Excise, Bangalore-III, Commissionerate Versus Stanzen Toyotetsu India (P.) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT where it was held that Cenvat credit can be availed with respect to these services as these services are rendered in relation to the manufacturing activity and there is nexus between services and the final product - appeal dismissed - decided against Revenue.

Summary

Issues:
- Eligibility of Cenvat credit on service tax paid on Life Insurance Policy of employees and on vehicles used for transportation of employees.

Analysis:
The appeal was filed by the revenue challenging the order passed by the Commissioner (A) allowing the appellant to take credit of service tax paid on Life Insurance Policy of employees and on vehicles used for transportation of employees. The appellants, engaged in manufacturing, availed Cenvat credit on insurance premium for employees and vehicle charges for employee transportation. The revenue contended that these services lack nexus to manufacturing, thus not qualifying as input services for Cenvat credit. Show cause notices were issued, and demands were confirmed for the periods covered, along with penalties. A subsequent notice for a different period was also issued, and the demand was confirmed. The appellant appealed the decision, which was allowed by the Commissioner, leading to the revenue's appeal.

During the hearing, the revenue argued that the impugned order did not consider the case's facts and circumstances, asserting that insurance policy and employee transportation charges are not related to manufacturing, hence not falling under the definition of input services. On the contrary, the respondent's Counsel defended the order, emphasizing that these services are essential and directly linked to employee productivity and manufacturing. Referring to legal precedents, the Counsel argued that insurance services and employee transportation are necessary as per statutory requirements and enhance employee productivity, thus having a direct nexus with the manufacturing process. The Counsel cited the decision of the Hon'ble High Court of Karnataka in a relevant case supporting the availment of Cenvat credit on similar services.

After considering the arguments and legal precedents cited, the Tribunal found that the services in question were considered input services in previous decisions and that the Commissioner's reliance on these decisions was justified. Citing the decision of the Hon'ble High Court of Karnataka in a specific case, the Tribunal upheld the impugned order, dismissing the revenue's appeal. The judgment was pronounced in open court on a specified date.