2018 (4) TMI 966 - AT - Service Tax

CENVAT credit - input services - insurance service (health insurance policy and the group mediclaim insurance policy of the company staff and employees) - Held that - Whether the policy covers the entire family with the single premium or whether separate premium has been paid for each dependent has to be verified. The ld. counsel has not been able to produce any document in this regard - it is fit to remand the matter to the adjudicating authority to analyse the issue afresh after verification of the documents produced by the appellant - appeal allowed by way of remand.

Summary

Issues:
- Availing CENVAT credit on insurance services
- Eligibility of service tax on insurance premium for dependents
- Remand for verification and analysis

Availing CENVAT credit on insurance services:
The appellants, manufacturers of Quartz Analog Watches, availed CENVAT credit on service tax paid for insurance services, including health insurance and group mediclaim insurance for company staff and employees. The Department contended that these services were not directly or indirectly related to manufacturing final products or providing output services, thus challenging the credit availed. After due process, the original authority confirmed the demand, interest, and penalties, which was upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

Eligibility of service tax on insurance premium for dependents:
During the proceedings, the appellant argued that the period in question predated the amendment that broadened the definition of input services to include "activities relating to business." The appellant contended that insurance services were obtained as a statutory requirement under the Industrial Disputes Act for the employees' benefit. However, it was unclear whether the service tax on premiums for dependents was included in the availed credit. The Tribunal found it necessary to verify if the premiums for dependents were directly related to manufacturing, emphasizing the need to examine the nature of the policy and the service tax paid for dependents.

Remand for verification and analysis:
In response to the appellant's submission that insurance services covered employees, their families, and dependents, the Tribunal deemed it essential to verify whether the premiums for dependents were part of manufacturing activities. As the appellant failed to provide relevant documents, the matter was remanded to the adjudicating authority for thorough analysis. The adjudicating authority was instructed to examine the documents, verify the premium payment structure, and consider relevant case laws before making a decision. Consequently, the impugned order was set aside, and the appeal was allowed for remand to conduct further verification and analysis.