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TMI Blog2019 (2) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... n India as well as outside India and appellant is only recovering the consideration attributable to those subsidiaries by issuance of the debit notes on cost basis and charging service tax for the subsidiaries located in India. In that circumstances, it cannot be said that the appellant is provided any business support service to their subsidiaries. Therefore, the said contention of the appellant is not acceptable. The last contention raised by the Ld. Counsel that there foreign entities and the appellant are same, therefore, they are entitled to take cenvat credit. If the said contention is taken to be correct, in that circumstances, why the appellant has recovered proportionate amount of consideration form their subsidiaries. If the appellant is recovering any amount attributable to their subsidiaries, therefore, the appellant itself is considering their subsidiaries are all together different from the appellant. In that circumstances, also the appellant is not entitled to take cenvat credit for the services availed by third party - the appellant is not entitled to avail cenvat credit on the proportionate consideration of the amount on Errors Omissions Liability Insurance Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and its subsidiaries from any unforeseenable eventuality and against the said activity of procuring insurance policy service, the Appellant is charging proportionate amount of consideration of premium as is attributable to each subsidiary company. During the course of Audit, it was found that the Appellant is availing cenvat credit on the proportionate amount attributable to subsidiary companies for which the appellant is not entitled to cenvat credit as the said service has not been availed by the appellant for their own-self, therefore, the proceedings were initiated against the appellant to deny cenvat credit availed by the appellant to that extent, attributable to the subsidiary companies and ordered for recovery of the same by issuance of the show cause notices. The matter was adjudicated and cenvat credit was denied on the ground that the arrangement between the appellant and the subsidiary companies to charge proportionate amount from subsidiaries is only a cost sharing arrangement and no taxable service has been provided by the Appellant to the subsidiary companies as the entire transaction did not involve realization of any additional consideration for the activity of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was entirely outside the taxable territory of India and the same is not taxable. As the appellant has discharged service tax on the said insurance policy and hence the Cenvat credit of such service tax is nothing but a refund of the service tax erroneously discharged by the appellant. In the event, if the said Cenvat credit is denied to the Appellant, the Department would be unjustly enriched. To support their contention of the appellant relied on the decision of the Hon ble Tribunal in the case of Bajaj Allianz General Insurance Co. Ltd. v Commissioner of Central Excise, Pune-Ill reported at 2015 (37) STR 316 (Tri-Mum). 5. Further, in alternate, it is his submission that the said impugned service would qualify as an input service for the appellant. It is the contention of the Ld. Counsel that the appellant being a Global IT service provider, the Appellant has entered into master agreements with the customers located abroad and the said fact has been acknowledged by the Adjudicating Authority. For the provision of services to the said foreign based customers, the Appellant has established subsidiaries in different countries which provide Information Technology Software Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey are having separate registration. Moreover, the certain subsidiary companies are located in outside India providing output service to the foreign clients. It is also a fact on record that the appellant has debited the proportionate amount of insurance policy in the account of subsidiaries on cost basis, in that circumstances, whatever amount attributable to the said apportionment to the subsidiary companies, the appellant has not received the services, therefore, not entitled to take cenvat credit in terms of Rule 3 of CENVAT Credit Rules, 2004. Admittedly, the amount of insurance policy paid by the appellant is not wholly utilized by the appellant but the same includes proportionate amount paid by the appellant on behalf of the subsidiaries. It is also a fact on record that the amount attributable to the local subsidiaries, the appellant has paid service tax which shows that the appellant was having considered view that the proportionate amount attributable to the subsidiaries, the appellant is not entitled to take cenvat credit, therefore, the appellant charged amount of service tax from the subsidiaries located within India. 10. Further, the contention of the Ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant is not entitled to avail cenvat credit on the proportionate consideration of the amount on Errors Omissions Liability Insurance Policy attributable to their foreign entities, therefore, the same is required to be reversed by the appellant. 13 We further take a note of the fact that the appellant has taken the cenvat credit in the guise of export of services which was well within the knowledge of the appellant that for the services which has been provided by Insurance Company on account of third party, the appellant is not entitled to take cenvat credit. Therefore, the extended period of limitation is rightly invoked. Consequently, the penalty on the appellant is imposable. In these terms, we hold that the penalty on the appellant is rightly imposed. 14. In these terms, we do not find any infirmity in the impugned orders qua demand on account of reversal of cenvat credit and imposition of penalty. 15. We further take a note of the fact that if the appellant is maintaining sufficient balance in their cenvat credit account during the intervening period, the appellant is not liable to pay interest. 16. In view of above, the following order is passed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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