2015 (10) TMI 1793 - AT - Central Excise

Denial of CENVAT Credit - insurance service of Employee Personal/Group Insurance premium - whether the CENVAT Credit can be availed on Service Tax paid on premium of Employees Personal/Group Insurance Service. - Held that - there is nexus in expenses for Group Insurance Scheme for workers. I find that the issue is squarely covered by the decision of Hon ble Bombay High Court in the case of Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd. - 2010 (10) TMI 13 - BOMBAY HIGH COURT , wherein it was held that the services having nexus or integral connection with the manufacture of final product as well as the business of manufacture of final product or providing services would qualify to be input service under Rule 2(1) of the Cenvat Credit Rules, 2004. Staff insurance forms part of manufacturing cost also under CAS-4 standard. Accordingly, following the ratio of the above cited decision, I set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
- Availment of CENVAT Credit on Service Tax paid on premium of Employees Personal/Group Insurance Service.

Detailed Analysis:

Issue 1: Availment of CENVAT Credit on Insurance Service
The appellant appealed against the Order-in-Appeal confirming a demand of &8377; 29,740/- with interest and penalty for availing CENVAT Credit on Service Tax paid on Employee Personal/Group Insurance premium. The appellant argued that they believed the insurance cost was part of production cost as per CAS-4 Standards, citing Commissioner Vs. M/s GTC Industries Ltd. The appellant contended that regular ER-1 Returns disclosed the credit availed, challenging the Revenue's claim of non-disclosure. The appellant sought to set aside the order, claiming the credit availed was not deliberate or conscious. The Revenue, represented by the AR, supported the lower authorities' findings.

Issue 2: Legal Interpretation
The Tribunal analyzed whether there was a valid nexus between the insurance expenses for the Group Insurance Scheme and manufacturing activities. Referring to the decision of the Hon'ble Bombay High Court in Commissioner of Central Excise, Nagpur Vs. Ultratech Cement Ltd., the Tribunal held that services with a nexus to the manufacture of the final product qualify as input services under Rule 2(1) of the Cenvat Credit Rules, 2004. It was established that staff insurance was part of the manufacturing cost under CAS-4 standards. Following the precedent set by the Bombay High Court, the Tribunal set aside the impugned order, allowing the appeal and any consequential relief as per the law.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and providing relief based on the legal interpretation of the nexus between insurance expenses and manufacturing activities as per relevant legal precedents and standards.