2014 (11) TMI 826 - HC - Central Excise

Cenvat Credit - Input services - Credit of insurance premium amount - Held that - Tribunal has failed to refer to the background facts. It has also not referred to the fact that whether the services and termed as input services in the case of Idea Cellular (2011 (1) TMI 811 - CESTAT, NEW DELHI) are identical or similar to one involved in the present case. - Having perused the order passed by the Tribunal and being totally dissatisfied with inadequate and crypt reasoning that the present Appeal is allowed. The impugned order of the Tribunal is quashed and set aside. - Matter restored before the tribunal - Decided in favor of revenue.

Summary

Issues:
1. Tribunal's disposal of the appeal without addressing the application for stay/waiver of pre-deposit.
2. Whether the Tribunal's order was reasonable and based on the precedent set in a previous case.
3. Admissibility of Cenvat credit for insurance premium amounts in different factory locations.
4. Correctness of the Tribunal's decision regarding input service credit for insurance premium payments.
5. Application of the ratio of a previous judgment in the present case.

Analysis:
1. The High Court addressed the Revenue's appeal challenging the Customs, Excise and Service Tax Appellate Tribunal's order on a stay application. The Tribunal disposed of the appeal without dealing with the stay application, leading to a complaint from the Revenue regarding the lack of reasoning in the order.

2. The Assessee supported the Tribunal's order by referring to a previous case involving Idea Cellular Limited, where the Tribunal allowed insurance of vehicles and laptops as input services for credit. The Assessee argued that the Tribunal's decision was not erroneous, and the appeal did not raise substantial legal questions warranting dismissal.

3. The High Court observed that the Tribunal's order lacked background facts and failed to compare the services in the present case with those in the Idea Cellular case. The issue in question was the admissibility of Cenvat credit for insurance premium payments across different factory locations, with the Mumbai factory being unable to claim credit due to not utilizing the input services there.

4. Despite potential support from the Idea Cellular case, the High Court found that the Tribunal should have considered the conflicting arguments before making a reasoned decision. As a result, the High Court admitted the appeal on substantial legal questions related to input service credit for insurance premiums.

5. Ultimately, the High Court allowed the appeal, quashed the Tribunal's order, and remanded the case for fresh consideration. The Court emphasized that it had not taken a stance on the arguments presented, leaving them open for the Tribunal's review. The Court also directed the Tribunal to reevaluate the appeal and stay application independently, providing comprehensive and satisfactory reasons for its decision.