2015 (3) TMI 743 - HC - Service Tax

Availment of CENVAT Credit - Utilization of credit of the service tax on the insurance premium in respect of a Transit Insurance of induction furnace and transformer, Group Personal Accidental Policy and. Group Health Guard Policy of Company staff - Held that - The Rule 2(l)(ii) is further defined by the description of certain services which are only inclusive. The transit insurance paid by the. Assessee on the aforesaid item is indirectly in relation to the manufacture of the final products and is included in service. - Tribunal committed no illegality in dismissing the appeal of the Department. - Decided against Revenue.

Summary

Issues:
Whether the respondent can avail Cenvat credit of Service Tax paid on insurance services for discharging their duty liability? If not, then are the respondent liable to reverse the Cenvat Credit wrongly availed in the present case?

Analysis:

The case involved M/s. Raipur Rotocoast Limited (the Assessee) utilizing Cenvat credit of service tax on insurance premiums for various policies. The Excise Department issued a show cause notice, leading to an order by Adjudicating Officers which was partly allowed on appeal. Subsequently, the Department filed an appeal, and the Assessee filed a cross-objection, both of which were dismissed by the Tribunal, resulting in the present appeal before the High Court.

The High Court considered the substantial question of law regarding the eligibility of the respondent to avail Cenvat credit of Service Tax paid on insurance services for discharging their duty liability. The definition of 'input service' under Rule 2(1)(I) of the Cenvat Credit Rules, 2004 was crucial. It was noted that 'input service' includes any service used by a provider of taxable service for providing an output service, as well as services used directly or indirectly by the manufacturer in relation to the manufacture of final products and their clearance.

The Court specifically highlighted that the transit insurance paid by the Assessee on the mentioned items was indirectly related to the manufacture of final products and thus fell within the ambit of 'input service.' Consequently, the Tribunal's decision to dismiss the Department's appeal was deemed lawful. Ultimately, the High Court found no merit in the appeal and dismissed it accordingly.