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2018 (2) TMI 1486 - AT - Central ExciseCENVAT credit - premium paid on insurance policies - Held that - The decision of the Hon ble High Court in Commissioner of Central Excise & Service Tax, LTU, Bangalore v. Micro Labs Ltd 2011 (6) TMI 115 - KARNATAKA HIGH COURTdid examine the eligibility of tax paid the premium for availment of credit and 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 assessees are not entitled to the benefit of CENVAT credit - appellant is entitled to credit of tax paid on insurance services to the extent that it pertains to its employees - appeal allowed - decided in favor of appellant.
Issues:
1. Determination of eligibility of CENVAT credit on premium paid on insurance policies. 2. Imposition of penalty under rule 15 of CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944. Issue 1: Determination of eligibility of CENVAT credit on premium paid on insurance policies: The appeal by M/s Positive Packaging Industries Ltd challenged the order-in-appeal of the Commissioner of Central Excise (Appeals - II), Mumbai, regarding the availed CENVAT credit of &8377; 2,94,955 on insurance policies premium between June 2014 and March 2015. The original authority deemed this credit as ineligible and recoverable under section 11A of Central Excise Act, 1944, with interest and imposed a penalty under rule 15 of CENVAT Credit Rules, 2004. The impugned order upheld this decision, leading to the current appeal. The appellant argued that a portion of the amount along with applicable interest was for coverage of family members, which was not in dispute. Citing the decision of the Hon'ble High Court of Karnataka in a similar case, the appellant claimed entitlement to the credit. The Hon'ble High Court's decision highlighted that insurance policies for employees, as mandated by statutes like the Employees State Insurance Act, constitute an input service under the CENVAT Credit Rules, 2004. Therefore, the appellant was found entitled to the credit for tax paid on insurance services related to its employees, leading to the allowance of the appeal. Issue 2: Imposition of penalty under rule 15 of CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944: The original authority had imposed a penalty on M/s Positive Packaging Industries Ltd under rule 15 of CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944, in addition to confirming the recoverable amount of CENVAT credit with interest. However, the decision to uphold the penalty was not specifically addressed in the detailed analysis provided in the judgment. The focus of the judgment was primarily on the eligibility of the CENVAT credit on insurance premiums paid, and the subsequent allowance of the appeal based on the interpretation of relevant legal provisions and precedents. Therefore, the specific reasoning or legal analysis regarding the imposition of the penalty was not explicitly discussed in the judgment, as the appeal was allowed based on the eligibility of the credit itself. In conclusion, the judgment by the Appellate Tribunal CESTAT MUMBAI addressed the issue of determining the eligibility of CENVAT credit on insurance premiums paid by M/s Positive Packaging Industries Ltd. The decision was based on the interpretation of relevant legal provisions and precedents, ultimately allowing the appeal and granting the appellant the entitlement to the credit for tax paid on insurance services related to its employees. The imposition of the penalty under rule 15 of CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944 was not explicitly discussed in the detailed analysis provided in the judgment, as the focus was primarily on the eligibility of the credit itself.
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