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2023 (12) TMI 181 - AT - Service TaxCENVAT Credit - input services - Life Insurance Service and Management of Investment under ULIP Plan services - providing both taxable services and exempted services without maintaining separate records - HELD THAT - The Tribunal in the case of HDFC STANDARD LIFE INSURANCE CO LTD AND BIRLA SUN LIFE INSURANCE COMPANY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI 2020 (10) TMI 578 - CESTAT MUMBAI ; followed subsequently in the case of LIFE INSURANCE CORPORATION OF INDIA VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI II 2020 (10) TMI 580 - CESTAT MUMBAI expresses the same view observing that the portion of the premium earmarked for savings(investment) is not an exempted service. Thus, it can safely be concluded that since no other service is provided by the appellant except life insurance service, a part of the premium collected towards savings(investment), cannot be considered as an exempted service and demand of 6% of the value of the premium attributable to other than risk coverage be confirmed under Rule 6(3(i) of CENVAT Credit Rule, 2004. The impugned orders are set aside - Appeal allowed.
Issues involved:
The judgment involves issues related to the interpretation of the definition of exempted services under Rule 2(e) of the CENVAT Credit Rules, 2004, the applicability of Rule 6(3)(i) of the CENVAT Credit Rules, 2004, and the imposition of penalty under Rule 15(3) of the CENVAT Credit Rules, 2004. Interpretation of Exempted Services: The appellants, engaged in providing taxable services under Life Insurance and Management of Investment under ULIP, were alleged to have availed CENVAT credit on both taxable and exempted services without maintaining separate records. The issue revolved around whether the services provided fell under the definition of taxable or exempted services. The appellant argued that life insurance services were taxable and not wholly exempt, thus not falling under the category of exempted services. They cited various judgments in support of their position. Applicability of Rule 6(3)(i) of CENVAT Credit Rules: The appellant contended that they did not provide any exempted service and that the option of reversing credit in proportion to exempted services could not be thrust upon them. They argued that the proportionate credit should be reversed, citing precedents where the option was allowed retrospectively with effect from 01.04.2008. Imposition of Penalty under Rule 15(3): The appellant challenged the imposition of penalty under Rule 15(3) of the CENVAT Credit Rules, 2004, arguing that there was no suppression of facts with mala fide intention. They maintained that the penalty was unwarranted and unsustainable given the issue's nature relating to the interpretation of exempted services. Judgment: The Tribunal, after considering the arguments and precedents, concluded that the portion of the premium earmarked for savings/investment in life insurance services did not constitute an exempted service. Relying on previous decisions, the Tribunal held that no separate identifiable service could be attributed to the investment portion of the premium, and thus, the demand of 6% of the value of the premium attributable to non-risk coverage was confirmed under Rule 6(3)(i) of the CENVAT Credit Rule, 2004. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief as per law.
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