2019 (7) TMI 652 - AT - Service Tax

100% EOU - Refund of CENVAT Credit - input services - output services relatable to their export of services - invoice issued by ICICI Lombard General Insurance Company Ltd - HELD THAT - The insurance in question was not for the personal benefit of any individual or Director, it only covers any liability that may arise on them in the course of their official work. Therefore, respectfully concurring with the decision of CESTAT, Chandigarh in the case of Ernst and Young Associates 2017 (10) TMI 456 - CESTAT CHANDIGARH , the appellant is entitled for the benefit of CENVAT credit under Rule 2(l) and consequently refund under Rule 5 of CCR 2004 in respect of this invoice - refund allowed. IFFCO-TOKIO General Insurance Co. Ltd. - three invoices providing medical insurance for the employees and their families - HELD THAT - It does not appear that all the services listed in the above clause have to be relatable to employees being on vacation such as Leave or Home Travel Concession. Such an interpretation would lead to absurd conclusions. It is inconceivable that the company provides outdoor catering to an employee who is on leave or home travel concession. Similarly it is absurd to say that the company may be providing beauty treatment or health services or plastic surgery or membership of a club, health and fitness centres etc., while the employee is in vacation or Home travel concession - the health insurance services have been clearly excluded from the Rule 2(l) of CCR 2004. Invoices issued by M/s TATA AIG General Insurance Co. Ltd. - HELD THAT - No individual has been made the beneficiary in this invoice. It is a commercial liability insurance meant for the company itself. Therefore, this is clearly not excluded under clause C of Rule 2(l) - the appellant is entitled for CENVAT Credit on the invoice issued by M/s TATA AIG General Insurance Company Limited. Invoices issued by New Vision Interiors for works contract services - HELD THAT - All these are Works contracts and they pertain to several activities such as scaffolding for replacement of facade glass of out gate area, fixing of toughen glass etc. Therefore, they are clearly excluded in the definition of input services under Rule 2(l) - the appellant is not entitled to CENVAT Credit on these services. Appeal allowed in part.

Summary

Issues Involved:
1. Refund of CENVAT credit related to General Insurance Service.
2. Refund of CENVAT credit related to Works Contract Service.
3. Refund of CENVAT credit related to Meals Coupons and food bills.
4. Refund of CENVAT credit related to Family day celebrations.

Detailed Analysis:

1. Refund of CENVAT credit related to General Insurance Service:
The appellant contested the rejection of CENVAT credit for general insurance services provided by ICICI Lombard and TATA AIG. The insurance from ICICI Lombard was for the Directors and Officers against any liability incurred during their official work, which was argued to be an input service under Rule 2(l) of CCR 2004. The tribunal agreed, citing the case of Ernst and Young Associates LLP, and concluded that the insurance was not for personal benefit but for professional liability, thus allowing the refund. However, the medical insurance provided by IFFCO-TOKIO was for the employees and their families, which was excluded under Rule 2(l) as health insurance primarily for personal use, and thus, the refund was denied.

2. Refund of CENVAT credit related to Works Contract Service:
The appellant argued that works contract services used for modernisation, renovation, or repair should be considered input services. However, the tribunal noted that the services were related to civil works and alterations, which are explicitly excluded under Rule 2(l)(A) of CCR 2004. Consequently, the refund for works contract services was denied.

3. Refund of CENVAT credit related to Meals Coupons and food bills:
The appellant did not contest the rejection of the refund related to meals coupons and food bills amounting to ?899, so this issue was not further deliberated.

4. Refund of CENVAT credit related to Family day celebrations:
The tribunal found that the services procured for family day celebrations were for the personal consumption of employees and their families, not for the provision of output services. As such, these were excluded under Clause 'C' of Rule 2(l) of CCR 2004, leading to the denial of the refund.

Conclusion:
- Appeal No. ST/30910/2018: Partly allowed. The tribunal allowed the refund for professional liability insurance provided by ICICI Lombard and commercial liability insurance by TATA AIG. The refund for medical insurance by IFFCO-TOKIO and works contract services was denied.
- Appeal No. ST/30911/2018: Rejected. The refund claims for works contract services and family day celebrations were denied as they were excluded under Rule 2(l) of CCR 2004.

Operative Portion:
The operative portion of the order was pronounced in open court at the conclusion of the hearing.