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2019 (1) TMI 1303 - AT - Service TaxCENVAT Credit - input services - services of personal insurance of employees - security agency services in respect of the guest house - Held that - In view of the embargo created in the definition of input service, service tax paid on insurance service for insuring the employees should not be considered as input service for the appellant - credit cannot be allowed. Security service availed by the appellant for its guest house, which is located outside the factory - Held that - There is no nexus between such disputed service with the output service provided by the appellant. Hence service tax paid on the security service should not be considered as input service for the purpose of availment of Cenvat benefit - Credit cannot be allowed. Demand of interest and penalty - irregularly availed CENVAT Credit, not utilized - Held that - The irregularly availed Cenvat Credit had not been used/utilized by the appellant for payment of service tax on the output services provided by it. In absence of utilization of Cenvat Credit, it cannot be said that there is loss of revenue to the Government exchequer, which can be compensated by way of payment of interest. Further, the Cenvat Credit particulars availed by the appellant were reflected in the books of accounts, which were verified by department for confirming the adjudged demand - Since the appellant had not suppressed any material particulars with regard to availment of Cenvat benefit, the provisions of Rule 15 (3) read with sub-Section (1) of Section 78 of the Act cannot be invoked for imposition of penalty - Demand of interest and penalty do not sustain. Appeal allowed in part.
Issues:
- Availment of Cenvat Credit on insurance service for employees - Availment of Cenvat Credit on security service for guest house - Disallowance of Cenvat Credit amount - Imposition of interest and penalty Availment of Cenvat Credit on insurance service for employees: The appellant had availed Cenvat Credit on service tax paid for insuring its employees. However, the definition of input service excludes life insurance and health insurance services primarily used for personal employee benefits. As a result, the service tax paid on insurance services for employees should not be considered as an input service eligible for Cenvat benefit. The Tribunal upheld the denial of Cenvat benefit on insurance services for employees. Availment of Cenvat Credit on security service for guest house: Regarding the security service availed by the appellant for its guest house, located outside the factory, the Tribunal found no nexus between this disputed service and the output service provided by the appellant. Consequently, the service tax paid on security services for the guest house should not be considered as an input service for Cenvat benefit. The Tribunal sustained the denial of Cenvat benefit on security services for the guest house. Disallowance of Cenvat Credit amount: The Central Excise Department disallowed Cenvat Credit amounting to ?1,22,737/-, citing that the disputed services did not conform to the definition of input service and lacked a nexus with the output service provided by the appellant. The adjudication order directed the appellant to pay interest on the disallowed Cenvat Credit amount. The Tribunal found that the irregularly availed Cenvat Credit had not been utilized for payment of service tax on output services. Since there was no loss of revenue to the Government due to non-utilization, the imposition of interest was deemed unjustified. The Tribunal set aside the disallowance of Cenvat Credit amount. Imposition of interest and penalty: The adjudication order imposed a penalty under the provisions of Rule 15 (3) of the Cenvat Credit Rules, 2004, along with interest on the disallowed Cenvat Credit amount. However, since the appellant had not suppressed any material particulars regarding the availment of Cenvat benefit and the Cenvat Credit particulars were reflected in the books of accounts, the Tribunal held that the penalty provisions could not be invoked. Therefore, the Tribunal set aside the interest and penalty confirmed by the authorities below, allowing the appeal partially. In conclusion, the Tribunal allowed the appeal in part, setting aside the interest and penalty imposed by the authorities below.
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