2022 (3) TMI 1099 - AT - Central Excise

CENVAT Credit - input services or not - staff insurance services being availed by the appellant for its employees - Rule 2 (l) of Cenvat Credit Rules, 2004 - HELD THAT - The bare perusal of rule 2 (l) of CCR, 2004, shows that no doubt the insurance services as taken by the appellant in the present case have specifically been excluded but the said exclusion applies if and only if the insurance service is used primarily for personal use or consumption of an employee. The Commissioner (Appeals) order is miserably silent about any finding for the impugned services to specifically be for the personal use of the employee/ employees of the appellant. The issue is otherwise no more res integra. This Tribunal in M/S HYDUS TECHNOLOGIES INDIA PVT LTD. VERSUS CCE, C ST, HYDERABAD-II 2017 (2) TMI 538 - CESTAT HYDERABAD has specifically held that unless there is some document to establish that the insurance services are availed for personal use or personal consumption of the employee, the services shall be eligible input service as those are the part of provident fund Scheme and provides maximum payments to the insured persons nominated beneficiary in the event of death due to natural cause accident or illness. Department has not produced anything on record to show that the services of Provident Fund were availed for the personal benefit of employees whereas what is apparent from the documents and contentions of the appellant that the life insurance services were availed by appellant for all of its employees under statutory mandate and not for the individual and personal consumption. Commissioner (Appeals) has failed to appreciate the statutory mandate of the appellant being the employer to get insured its employees - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of Cenvat Credit on staff insurance.
2. Interpretation of Rule 2(l) of Cenvat Credit Rules, 2004.
3. Allegations of suppression by the appellant.
4. Application of exclusion clause to insurance services.
5. Compliance with statutory requirements for insurance services.

Analysis:

Admissibility of Cenvat Credit on staff insurance:
The appellant, engaged in manufacturing excisable goods, availed Cenvat Credit on staff insurance. The Department alleged inadmissibility of the credit, leading to recovery proposals and penalties. The appellant contested these actions, arguing that the insurance services were eligible input services. The Commissioner (Appeals) initially confirmed the denial of credit, which was upheld in the appeal. The appellant approached the Tribunal, seeking relief.

Interpretation of Rule 2(l) of Cenvat Credit Rules, 2004:
The crux of the matter revolved around the interpretation of Rule 2(l) of Cenvat Credit Rules, 2004. The exclusion clause of the definition of input services was pivotal in determining the admissibility of the Cenvat Credit. The appellant argued that the exclusion applied only if the insurance services were used primarily for personal employee consumption, which was not the case here. The appellant cited relevant legal precedents and legislative mandates to support their position.

Allegations of suppression by the appellant:
The Department alleged suppression on the part of the appellant, which the appellant vehemently denied. The focus, however, remained on the admissibility of the Cenvat Credit and the interpretation of relevant rules and provisions.

Application of exclusion clause to insurance services:
The exclusion clause in Rule 2(l) of Cenvat Credit Rules, 2004, specifically mentioned services like life insurance, among others, as excluded from the definition of input services. However, the exclusion applied only if the services were used primarily for personal employee consumption. The appellant demonstrated that the insurance services were availed under statutory mandates for the benefit of all employees, not for individual personal consumption.

Compliance with statutory requirements for insurance services:
The Tribunal's analysis focused on the statutory obligations of the employer to provide insurance for employees under various Acts. The Tribunal highlighted that the insurance services were not for personal employee use but were part of statutory mandates to protect employees. Citing relevant legal precedents and larger bench decisions, the Tribunal held in favor of the appellant, setting aside the Commissioner (Appeals) order and allowing the appeal.

This detailed analysis of the issues involved in the legal judgment showcases the arguments presented by both parties, the interpretation of relevant rules and provisions, and the application of statutory requirements in determining the admissibility of Cenvat Credit on staff insurance.