2019 (3) TMI 1418 - AT - Central Excise

CENVAT Credit - input services - insurance and group mediclaim policy - dismantling services - Held that - such extension of insurance benefits to the employees is a statutory requirement without which a manufacturing unit of the appellant s stature cannot manufacture the final product, besides the fact that the appellant claims that unless it provides medical facilities and insurance coverage to its employees and they are assured of proper medical attention that would generally affect their wellbeing, productivity and consequently, the manufacturing business of the appellant would suffer. - the credit taken by the appellant on insurance and group mediclaim policy services is admissible credit. Dismantling services availed to different another unit - Held that - the appellant s claim that part of process is carried out will not be accepted for the reason that no activities in the appellant s Mouda complex had taken place that would have any bearing on production at the appellant s unit. - the same credit cannot be availed by the appellant Extended period of limitation - wilful intention or not - Held that - the extended period should not have been invoked enabling the adjudicating authority to impose penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, when such credits were held by the Commissioner (Appeals) to have been taken only in the Books of Account and verified by him to have not been availed by it. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refusal to hold cenvat credit on insurance and group mediclaim policy and on dismantling services as admissible credit.

Analysis:
1. Refusal to Hold Cenvat Credit on Insurance and Group Mediclaim Policy:
The appellant challenged the refusal of cenvat credit on insurance and group mediclaim policy services before the learned Commissioner (Appeals). The appellant argued that the denial of credit was based on an erroneous application of Rule 5 of the Central Excise (Appeals) Rules, 2001. The appellant contended that the insurance and mediclaim services qualify as input services for which cenvat credit is admissible, citing the mandatory requirement under Section 38 of the Employees State Insurance Act, 1948 for companies to provide insurance coverage to employees. The tribunal found that the Commissioner (Appeals) misinterpreted Rule 5 and equated additional grounds with additional evidence. The tribunal held that the credit taken by the appellant on insurance and group mediclaim policy services is admissible credit, as it is a statutory requirement for the appellant's manufacturing operations.

2. Refusal to Hold Cenvat Credit on Dismantling Services:
Regarding dismantling services, the appellant claimed credit for dismantling carried out at its Kalwa factory for the purpose of erection of machineries at its Mouda complex in Nagpur. However, as no erection took place after dismantling, the tribunal held that the appellant could not avail credit for the dismantling services. The tribunal emphasized that no activities in the Mouda complex had taken place that would impact production at the appellant's unit. Despite the appellant's argument that the credit could have been availed by its Kalwa factory, the tribunal found that the extended period should not have been invoked for penalty imposition, as the credits were not availed by the appellant. The order set aside the refusal of cenvat credit on dismantling services, insurance, and group mediclaim services by the Commissioner (Appeals).

In conclusion, the tribunal allowed the appeal, overturning the decision of the Commissioner of GST & Central Excise (Appeals), Nagpur, and confirming the admissibility of cenvat credit on insurance, group mediclaim policy services, and dismantling services. The judgment highlighted the importance of statutory requirements and the need for a factual analysis to determine the admissibility of credits in such cases.