2018 (3) TMI 239 - AT - Central Excise

CENVAT credit - whether the service tax paid on medical insurance premium for health insurance is admissible for cenvat credit or otherwise? - Held that - the CISF employees are working for the appellant. In this fact, the service on which credit was availed i.e. medical premium for consumption is clearly excluded from the definition of input service - credit not allowed. Demand of interest - Held that - the interest is chargeable only when the cenvat credit is taken as well as utilized therefore merely by taking credit and without utilization the interest under Rule 14 is not payable - interest is not chargeable. Appeal allowed in part.

Summary

Issues:
Whether service tax paid on medical insurance premium for health insurance is admissible for cenvat credit.

Analysis:
The appellant argued that the health insurance for CISF personnel, who are not their employees, should not be excluded under Rule 2(l) of Cenvat Credit Rules. They contended that the exclusion clause applies only when services are used for personal use of any employee. However, the Tribunal disagreed, stating that the exclusion is not limited to the appellant's employees but extends to "any employee." Since CISF employees work for the appellant, the medical premium for consumption falls under the exclusion clause, justifying the denial of credit.

Regarding the payment of interest under Rule 14 of the Cenvat Credit Rules, the Tribunal clarified that interest is chargeable only when the cenvat credit is both taken and utilized. As the appellant maintained a cenvat balance higher than the credit involved in the case, the interest was deemed not payable. Consequently, the Tribunal upheld the denial of cenvat credit on medical premium insurance but set aside the demand for interest. The impugned order was modified accordingly, and the appeal was partly allowed.