2017 (12) TMI 1198 - AT - Central Excise

CENVAT credit - input service - insurance of cars tractors - group personal accident insurance - insurance of their employees - Held that - to examine if the credit is admissible or not it has to be first ascertained if the vehicle was capital goods or not. Similarly while ascertaining the admissibility of credit on insurance service it has to be first ascertained if the said service was used primarily for personal use or consumption of any employee - The lower authorities have not given any final findings on these two issues - Since the lower authorities have not examined on these aspects the impugned order is set aside and the matter remanded to the original adjudicating authority to give specific findings on the above aspects - appeal allowed by way of remand.

Summary

Issues:
Denial of Cenvat Credit on input service and imposition of penalty and interest.

Analysis:
The appellant, M/s. Mahalaxmi TMT Pvt. Ltd., appealed against the denial of Cenvat Credit on input services related to insurance of vehicles and imposition of penalty and interest. The appellant argued that the denial was unjustified and relied on a previous Tribunal decision to support their claim. On the other hand, the Additional Commissioner (AR) for the respondent relied on a different Tribunal decision to support the impugned order. The presiding Member, after considering the rival submissions, noted that the impugned order solely relied on the decision in the case referenced by the AR. The definition of input service during the relevant period excluded specific services related to motor vehicles, unless used for certain specified purposes. The Member observed that the lower authorities had not conclusively determined whether the vehicles in question were capital goods or if the insurance services were primarily for personal use. Therefore, without these determinations, the admissibility of credit could not be decided. Consequently, the impugned order was set aside, and the matter was remanded to the original adjudicating authority for specific findings on these crucial aspects before deciding afresh. The appeal was allowed by way of remand.

This detailed analysis of the judgment highlights the key arguments presented by the appellant, the reliance on previous Tribunal decisions, the exclusion clauses in the definition of input service, and the crucial determinations required for assessing the admissibility of credit on insurance services related to vehicles. The Member's decision to remand the matter for further examination underscores the importance of establishing the capital goods status of vehicles and the primary use of insurance services before making a final determination on Cenvat Credit eligibility.