2012 (12) TMI 265 - AT - Central Excise

Eligibility for Cenvat credit - nexus with the manufacture of final products input service - manufacture sugar and molasses - services of the insurance of - plant and machinery including breakdown of machinery, company s vehicles, employees in respect of medical claim (Medi-claim), stock of finished goods (sugar) and molasses (by product) kept in the factory, cash in safe and transit; and finished goods (sugar) in transit - According to Department services have no nexus with the manufacture of final products Held that - Any prudent businessman in manufacturing business would insure his plant and machinery, goods in storage, cash in transit and goods in transit if his sales are on FOR destination basis - services are integrally connected with the manufacturing business of an assessee and the same have to be treated as activities relating to business and hence covered by the definition of input service - appellant plead that the lower authorities decided the case against them without giving them opportunity to produce these documents - Since these documents go to the root of the matter, the miscellaneous application filed by the appellant for admitting this additional evidence is allowed - appellant s claim regarding Cenvat credit can be examined with regard to these documents only by the original adjudicating authority, tine matter has to be remanded to the original adjudicating authority

Summary

Issues: Eligibility of Cenvat credit for insurance services related to manufacturing business.

Analysis:
1. The appellant, engaged in manufacturing sugar and molasses, availed Cenvat credit for service tax paid on insurance services covering plant and machinery, vehicles, employees' medical claims, stock of finished goods, cash in transit, and finished goods in transit. The Department contended that these services lacked nexus with manufacturing final products, thus not falling under the definition of 'input service' as per Rule 2(l) of Cenvat Credit Rules, 2004. A show cause notice was issued seeking recovery of the Cenvat credit amount. The Additional Commissioner confirmed the demand, imposing interest and penalty. This decision was upheld by the CCE (appeals), leading to the current appeal and stay application.

2. The appellant argued that the insurance services were essential for their manufacturing business, citing relevant Tribunal judgments. They claimed to possess all necessary details and invoices supporting the Cenvat credit taken. The Department, however, reiterated that the services in question did not meet the 'input service' criteria and objected to the submission of additional documents not presented before the original adjudicating authority.

3. The Tribunal deliberated on whether the insurance services, such as coverage for plant and machinery, goods in storage/transit, and employee insurance, fell within the 'input service' definition. The main definition part encompassed services directly or indirectly related to manufacturing. It was established that services integral to business operations, like insurance, were covered under 'activities relating to business,' as per Tribunal and High Court precedents. The Department's objection regarding lack of details on insured items and invoices was addressed by allowing the submission of additional evidence.

4. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh assessment based on the newly admitted documents. The directive included completing the adjudication within three months. The stay application and miscellaneous application were also disposed of accordingly.