2020 (1) TMI 272 - AT - Service Tax

CENVAT Credit - input services - keyman mediclaim/insurance policy - case of the Department is that the life insurance policy of the keyman person, Shri Anil Singhal (Managing Director), is primarily for his personal use and not for any business purposes, and credit cannot be allowed - HELD THAT - The issue has been decided by this Tribunal in favour of the appellant in their own case M/S. OM LOGISTICS LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, 2019 (8) TMI 1451 - CESTAT, PRINCIPAL BENCH, NEW DELHI where it was held that appellant is entitled to benefit of cenvat credit under Rule 2 (l) of Cenvat Credit Rules on the Keyman Insurance. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Upholding of demand on Cenvat credit availed for keyman mediclaim/insurance policy
2. Interpretation of Cenvat Credit Rules regarding insurance policy for Key Managerial Person

Analysis:
Issue 1: The appellant filed an appeal against the order confirming the demand of ?4,77,219 on Cenvat credit availed for a keyman mediclaim/insurance policy. The lower adjudicating authority upheld the demand along with interest and imposed a penalty. The appellant, aggrieved by this order, approached the Tribunal.

Issue 2: The appellant, M/s Om Logistics Ltd., availed Cenvat credit on expenses related to a Keyman Insurance Policy for the Key Managerial Person, Shri Anil Singhal, who was the Managing Director. The Department contended that the insurance policy was for personal use, not business purposes, and issued a show cause notice for reversal of Cenvat credit, interest, and penalty. The appellant argued that the insurance premium paid for Keyman insurance was an available input service under the Cenvat Credit Rules.

The Tribunal examined the case and referred to a previous judgment in the appellant's favor regarding the availability of credit on the insurance policy. It was noted that the policy documents clearly stated that the benefit was payable to the appellant company, being the policyholder. The Tribunal held that the lower authorities erred in imposing the demand and interest, as the appellant was entitled to the benefit of Cenvat credit under Rule 2(l) of the Cenvat Credit Rules. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the importance of the policyholder being the beneficiary in the insurance policy for availing Cenvat credit.