2019 (2) TMI 854 - AT - Central Excise

Refund of unutilized CENVAT credit - services used for export of goods - insurance service - setting-up of Effluent Treatment Plant - denial on account of nexus - N/N. 27/2012-CE dated 18.06.2012 read with Rule 5 of CCR, 2004 - Held that - Insurance undertaken in the present case relates to commercial general liability insurance which covers the general business risk and not for coverage of claims related to accidents and to personal injury and personal medical expenses. - the insurance covering commercial general liability and Marine policy falls in the definition of input service and CENVAT credit is available to the appellant. Denial of refund of ₹ 3,03,240/- for setting-up of ETP - Held that - Both the authorities have mis-interpreted the exclusion clause provided in input service w.e.f. 01.04.2011. Both the authorities have considered the setting-up of ETP as construction service and therefore is not covered under the definition of input service - the setting-up of ETP is a statutory requirement for carrying out the manufacturing activity and therefore, the ETP is an integral part of manufacturing setup and setting-up of the ETP is covered under the scope of input service as defined in CCR, 2004; therefore rejection of the refund claim on these services is also not tenable in law. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Refund claim rejection for insurance service and setting-up of Effluent Treatment Plant.

Insurance Service Refund Claim:
The appellant, a 100% EOU, filed a refund claim for unutilized CENVAT credit of Service Tax paid on various services used for export. The Commissioner (A) partly allowed the appeal but rejected the refund claim for insurance service and setting-up of Effluent Treatment Plant. The appellant challenged the rejection specifically on these two services. The appellant argued that the insurance was for 'commercial general liability' and not for personal injury or accidents. Citing legal precedents, the appellant contended that marine insurance is an input service. The Tribunal found that the insurance covered general business risks and fell under the definition of 'input service.' The Tribunal allowed the appeal related to the insurance service refund claim.

Setting-up of Effluent Treatment Plant Refund Claim:
The Commissioner (A) upheld the rejection of the refund claim for setting-up of Effluent Treatment Plant, considering it as a construction service excluded from the definition of 'input service.' The appellant argued that ETP installation is a statutory requirement integral to the manufacturing setup, not a construction activity. The Tribunal reviewed photographs and invoices provided by the appellant, concluding that ETP is essential for manufacturing and falls under the scope of 'input service.' The Tribunal set aside the impugned order related to the denial of the refund claim for setting-up of ETP, allowing the appeal on this issue as well.