2018 (4) TMI 1400 - AT - Service Tax

CENVAT credit - Group Insurance - insurance policies were procured by the respondents between July, 2010 to December, 2010 for a period of one year and it was alleged that the respondents have willfully taken credit of the said input service and utilized the same wrongly, which came to the knowledge of the Department only in the course of audit conducted during August, 2011 - Held that - on the date when the Cenvat credit was earned and eligible to be taken the same was legally taken by the appellant in terms of Rule 2(l) of Cenvat Credit Rules - There is no provision in the Cenvat Credit Rules that credit taken prior to 1st April, 2011, pursuant to amendment in Rule 2(l) shall become bad and or disallowed. Neither the said amendment have got any retrospective effect - appeal dismissed - decided against Revenue.

Summary

Issues:
Taking of Cenvat credit for the period April, 2009 to June, 2011 amounting to ?35,57,078/- towards Group Insurance.

Analysis:

1. Background and Allegations:
The appeal concerns the Cenvat credit for the period April, 2009 to June, 2011, amounting to ?35,57,078/- towards Group Insurance. The respondent, a company providing taxable services, was issued a show cause notice proposing to deny the Cenvat credit on service tax paid for Group Insurance after 31/03/2011. The insurance policies were procured between July, 2010 to December, 2010, and it was alleged that the credit was utilized wrongly, discovered during an audit in August, 2011.

2. Order-in-Original and Appeal:
The Order-in-Original confirmed the demand and penalty under Rule 15(3) of CCR, 2004. The respondent appealed to the Learned Commissioner (Appeals), who allowed the appeal. The Commissioner observed that there was no dispute about the availability of credit on group insurance service before 01/04/2011. The Commissioner relied on relevant rulings to support the allowance of Cenvat credit.

3. Appeal Before Tribunal:
The Revenue appealed to the Tribunal, reiterating the allegations in the show cause notice. Reference was made to a Tribunal ruling regarding the admissibility of Cenvat credit for specific services up to 01/04/2011.

4. Contentions and Decision:
The Respondent's counsel argued that their case was distinguishable from the referenced ruling and that the credit was rightfully taken before 01/04/2011. The Tribunal, after considering the contentions, found that the credit was legally taken by the appellant as per Rule 2(l) of Cenvat Credit Rules. The Tribunal noted that there was no provision for disallowing credits taken before 01/04/2011 due to subsequent amendments. The Tribunal upheld the order of the Commissioner (Appeals) and dismissed the Revenue's appeal.

5. Conclusion:
The Tribunal's judgment emphasized the legality of the credit taken by the appellant before the specified date and highlighted the absence of retrospective effects on the relevant amendments. The decision supported the Commissioner's ruling, ultimately dismissing the Revenue's appeal for lacking merit.