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2024 (6) TMI 131 - AT - Service TaxCENVAT Credit - input services - services are used in or in relation to the provision of output service or not - insurance services - air travel agency services - scope of amendment after 02.04.2011 to the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. HELD THAT - In order to examine whether a particular service is covered as inputs service , either it could be covered under category (i) or (ii) and should not fall under the exclusion category under (iii) above. As regards the Cenvat credit availed in respect of insurance services, it is found that to the extent that such services are not used primarily for personal use or for consumption of any employee, they would qualify as eligible input service by being not specifically covered under the clause (C) of Rule 2(l) ibid. Insurance Services - HELD THAT - The sample invoice produced by the appellant indicate that these are for Group Insurance Policy provided by Ergo General Insurance Co. Ltd., for covering the risk of the business travel abroad including specific clauses for emergency medical facility/expense, loss of baggage/documents and baggage delay, flight delay etc., which has direct nexus on the availability of employee at the project site abroad for completion of the output services. As the insurance services as above are in the nature of services availed for providing output service in terms of ensuring that the project site, personnel employed for providing output service are protected for providing continuous and uninterrupted service, these cannot be categorised as being in the nature of insurance service for personal use or consumption of employees. Air travel agent services - HELD THAT - In respect of air travel agent services provided to their employees, sample documents of American Express Business Travel, travel agency service provided by American Express (India) Pvt. Ltd., Gurgaon indicate that the travel arrangements are for travel abroad as employee for business purposes. Thus, these services are not covered under the exclusion clause (C) of Rule 2(l) ibid. The dispute in respect of availment of Cenvat credit on insurance service is no more open to debate, as in a number of cases the Tribunal has held the same as admissible - reliance can be placed in M/S. HONDA MOTORCYCLE SCOOTER INDIA PVT. LTD. VERSUS CCE, DELHI-III 2016 (8) TMI 308 - CESTAT CHANDIGARH . The Hon ble High Court of Karnataka has held the insurance service as admissible for availing the Cenvat credit as input services - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS MICRO LABS LTD. 2011 (6) TMI 115 - KARNATAKA HIGH COURT . Services which were excluded by the amendment after 02.04.2011 to the definition of Rule 2(l) of the Cenvat Credit Rules, 2004 - HELD THAT - The said services are - outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees such as Leave or Home Travel Concession. The amendment indicates when such services are used purely for personal use for consumption of any employee, the Cenvat credit cannot be allowed. On perusal of the records, it is found that the appellant has been taking the insurance service and air travel agency service on which Cenvat credit is sought to be denied relying upon the said amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, is incorrect as these services are utilized for the purposes other than personal use of employees or for consumption of employees. Thus, the input tax paid on these services would be available as Cenvat credit for under CCR, 2004, even after the amendment brought into effect from 02.04.2011. The impugned order is liable to be set aside to the extent of denial of Cenvat credit in respect of insurance services and air travel agency services, as these are found to be eligible input service under Rule 2(l) of the Cenvat Credit Rules, 2004, in the present factual matrix of the case - Appeal allowed in favor of appellant.
Issues Involved:
1. Eligibility to avail Cenvat credit on insurance services. 2. Eligibility to avail Cenvat credit on air travel agency services. 3. Impact of the amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, effective from 02.04.2011. Summary: 1. Eligibility to avail Cenvat credit on insurance services: The appellant, engaged in providing information technology services, availed Cenvat credit on insurance services obtained for employees traveling abroad for business purposes. The insurance services included coverage for business travel risks, emergency medical expenses, and other related risks. The Tribunal held that these insurance services are not for personal use or consumption of employees but are essential for ensuring uninterrupted provision of output services. Hence, the insurance services qualify as eligible 'input services' u/r 2(l) of the Cenvat Credit Rules, 2004. The Tribunal relied on precedents such as the cases of Honda Motorcycle & Scooter (I) Pvt. Ltd. and Micro Labs Ltd., which supported the admissibility of Cenvat credit on insurance services required under statutory obligations like the Employees State Insurance Act. 2. Eligibility to avail Cenvat credit on air travel agency services: The appellant also availed Cenvat credit on air travel agency services used for booking air tickets for employees traveling abroad for business purposes. The Tribunal found that these services are directly linked to the provision of output services and are not for personal use or consumption of employees. Therefore, the air travel agency services qualify as eligible 'input services' u/r 2(l) of the Cenvat Credit Rules, 2004. 3. Impact of the amendment to Rule 2(l) of the Cenvat Credit Rules, 2004, effective from 02.04.2011: The amendment to Rule 2(l) excluded certain services used for personal consumption of employees from the definition of 'input services.' However, the Tribunal held that the insurance and air travel agency services availed by the appellant were not for personal use but were essential for business purposes. Thus, these services remained eligible for Cenvat credit even after the amendment. Conclusion: The Tribunal set aside the impugned order to the extent of denial of Cenvat credit on insurance services and air travel agency services. It allowed Cenvat credit amounting to Rs.18,24,678/- for these services, holding them as eligible input services under the Cenvat Credit Rules, 2004. The appeal filed by the appellant was allowed in favor of the appellant.
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