2022 (9) TMI 1054 - AT - Central Excise

CENVAT Credit - Input services - availment of Mediclaim Insurance Service for its employees and their dependents (group medical insurance service) - invoices issued by their Head Office at Chennai, in their capacity as Input Service Distributor (ISD) - it is alleged that the service has not been used directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal - period from April 2010 to March 2011 - HELD THAT - The issue as to the eligibility of CENVAT Credit in respect group medical insurance service for the period prior to 01.04.2011 is no more res integra, since the same has been laid to rest by the orders of various judicial fora. It is seen that on an identical set of facts, the Mumbai Bench of the CESTAT in its order in the case of PTC SOFTWARE (INDIA) PVT. LTD. VERSUS COMMR OF CENTRAL EXCISE, PUNE-III 2014 (12) TMI 498 - CESTAT MUMBAI , relied upon by the Learned Advocate for the appellant, has followed the judgements of the Hon ble Karnataka High Court in the cases of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS MICRO LABS LTD. 2011 (6) TMI 115 - KARNATAKA HIGH COURT and COMMISSIONER OF CENTRAL EXCISE, BANGALORE-III, COMMISSIONERATE VERSUS STANZEN TOYOTETSU INDIA (P.) LTD. 2011 (4) TMI 201 - KARNATAKA HIGH COURT to hold that credit of Service Tax paid on insurance premium on group insurance policy is allowable since the said service is an eligible input service. The disallowance of CENVAT Credit in respect of group medical insurance service for the disputed period is not sustainable, for which reason the impugned order upholding the order of the Adjudicating Authority disallowing the credit, is liable to be aside. Appeal allowed.

Summary

Issues:
1. Disallowance of CENVAT Credit for Mediclaim Insurance Service.
2. Interpretation of "input service" under CENVAT Credit Rules, 2004.
3. Applicability of restrictions post-April 2011.
4. Legal precedent and case-law references.

Issue 1: Disallowance of CENVAT Credit for Mediclaim Insurance Service:
The appellant, engaged in manufacturing, availed CENVAT Credit on Service Tax paid for Mediclaim Insurance Service. The Revenue alleged that this service was not used in or in relation to manufacturing final products, proposing recovery and penalty. The Adjudicating Authority disallowed a significant amount of credit, leading to an appeal. The appellant argued that the Mediclaim Insurance Service was integral to their business activities, citing the absence of specific restrictions during the relevant period. The Departmental Representative contended that the lack of uniform premium documentation justified the disallowance. The Tribunal found the disallowance unsustainable based on legal precedents allowing CENVAT Credit for group medical insurance services, setting aside the impugned order and allowing the appeal.

Issue 2: Interpretation of "input service" under CENVAT Credit Rules, 2004:
The primary issue revolved around whether the Mediclaim Insurance Service qualified as an "input service" under the CENVAT Credit Rules, 2004. The appellant argued that the service was essential to their business activities, while the Revenue emphasized the lack of uniform premium documentation. The Tribunal relied on legal precedents to establish that group medical insurance services were eligible input services, thereby rejecting the disallowance of CENVAT Credit.

Issue 3: Applicability of restrictions post-April 2011:
The appellant highlighted the broader scope of "input service" before April 2011 and the subsequent restrictions introduced post-April 2011. The Tribunal considered this aspect but ultimately based its decision on established legal precedents supporting the eligibility of CENVAT Credit for group medical insurance services, irrespective of the timing of restrictions.

Issue 4: Legal precedent and case-law references:
The appellant and the Revenue presented case-law to support their arguments. The appellant cited various cases, including M/s. PTC Software (India) Pvt. Ltd. and M/s. Faurecia Interior Systems (I) P. Ltd., to establish the eligibility of CENVAT Credit for group medical insurance services. The Tribunal referenced these cases and other judicial decisions to conclude that the disallowance of CENVAT Credit for the Mediclaim Insurance Service was not sustainable, ultimately allowing the appeal.

This detailed analysis of the judgment addresses the issues involved, the arguments presented by both parties, the legal interpretation applied by the Tribunal, and the final decision rendered in favor of the appellant.