2018 (5) TMI 1049 - AT - Central Excise

CENVAT credit - insurance policy obtained under Workmen s Compensation Scheme - appellant is a manufacturer of explosives - Held that - the appellant being a manufacturer of explosives required to take out insurance policy under the Workmen s Compensation Scheme - identical issue in respect of similarly placed industry, i.e. M/s Economic Explosives Ltd. 2018 (5) TMI 1034 - CESTAT MUMBAI was considered by the Bench and was held in favor of assessee, by holding that Insurance service availed to protect workmen has direct nexus to the manufacturing activity of the appellant since appellant is engaged in the manufacture of explosives - credit allowed - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Eligibility to avail CENVAT credit on service tax paid for insurance policy under Workmen's Compensation Scheme.

Analysis:
The appeal addressed the issue of eligibility to avail CENVAT credit on service tax paid for an insurance policy obtained under the Workmen's Compensation Scheme. The appellant, a manufacturer of explosives, argued that since the insurance policy was a statutory obligation, CENVAT credit should be allowed. The appellant cited a previous decision in a similar case involving M/s Economic Explosives Ltd., where the appeal was allowed in favor of the assessee. The Tribunal referenced Rule 2(1) of CENVAT Credit Rules, 2004, stating that the exclusion does not apply when inputs are used for the safety of employees under a statutory obligation like workmen's compensation. The Tribunal held that the insurance service to protect workmen had a direct nexus to the manufacturing activity of the appellant. Citing a previous decision involving FIEM Industries Ltd. vs. CCE, Chennai-III, the Tribunal allowed the appeal, setting a precedent for similar cases.

The Tribunal, after careful consideration, concluded that the issue was settled in favor of the appellant based on the precedent set by the Tribunal's decision in a similar matter. The Tribunal held that the impugned order was unsustainable and set it aside, ultimately allowing the appeal. The judgment emphasized the importance of statutory obligations related to employee safety and the direct connection of such obligations to the manufacturing activities of the appellant. The decision highlighted the relevance of previous rulings in establishing a consistent approach to cases involving CENVAT credit eligibility for insurance policies under statutory schemes like the Workmen's Compensation Scheme.