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TMI Blog2024 (2) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... ISSIONER OF CENTRAL EXCISE SERVICE TAX CUSTOMS, BANGALORE (ADJUDICATION) , THE COMMISSIONER OF SERVICE TAX VERSUS M/S. PNB METLIFE INDIA INSURANCE CO. LTD. [ 2015 (5) TMI 68 - KARNATAKA HIGH COURT ], the issue that came up for consideration before the Karnataka High Court was whether an assessee can avail Cenvat credit of service tax paid on re-insurance services by treating the said service as an input service . PNB Metlife India Insurance Company was carrying on life insurance business and on the insurance policy issued by it, service tax was charged from the customers. It also procured re-insurance service from overseas insurance companies and availed Cenvat credit of service tax paid on such services received by it. The Cenvat credit was denied by the Department for the reason that re-insurance service cannot be considered as an input service since it takes place after the insurance policy is issued. The Hon ble High Court noted that since re-insurance has to be taken under Section 101A of the Insurance Act, 1938, it is a statutory obligation and, therefore, has to be considered as having nexus with the output service and, therefore, would be an input service , f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said amount. The appellant had paid premium along with service tax to the insurance company on receipt of invoices/documents from the said insurance company. The appellant had taken CENVAT credit of the service tax paid by the insurance company on the premium for the master insurance policy issued to the appellant, which is the subject matter of dispute as to its eligibility. As per the impugned order, it is held that said service is not eligible as input service and not eligible for CENVAT credit. The adjudicating authority has not considered the submission made by the appellant and as per the impugned order, it is held that the Insurance Company was providing service in relation to insurance of the gold belonging to the customers of the appellant and which was purchased from the appellant. Thus, adjudicating authority confirmed demand of Rs.55,02,796/- and Rs. 45,13,601/ with interest and penalty. Aggrieved by said order, present appeals are filed. 3. When the matter came up for hearing, the Learned Counsel for the appellant submits that as per the impugned order, adjudicating authority held that appellant is providing service under the category of Business Auxiliary Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Financial institution is given and it include carrying on any class of insurance business . Further, the proviso of Rule 4(a)(1) Service Tax Rules, 1994 make it abundantly clear that in case of service provided by a non-banking financial company, any document by whatever named called would be used in the place of an invoice, bill or challan. Thus, the reason given by the Adjudicating authority denying the benefit on the ground that the document is without proper serial number is illegal and unsustainable. 6. Regarding the penalty, Learned Counsel submits that the appellant had availed the CENVAT credit on bonafide belief that insurance service is being an inevitable part of the Gold Care warranty scheme and insurance service utilized for said scheme would an eligible input. Therefore, the provisions of Section 11(AC), which are conditional proceeding for imposing penalty under Section 15(1) of the CENVAT Credit Rules is unsustainable. Moreover, there is no evidence to allege that the appellant had suppressed the details of the transactions so as to attract the provisions of Section 11(AC) of the Central Excise Act, 1944. Thus, the penalty imposed on the appellant is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in the taxable territory but shall not include a service, (1) specified in Section 66D of the Finance Act; or (2) where the whole of service tax is liable to be paid by the recipient of service. 9. Sub-rule (1) of Rule 3 of the 2004 Rules provides that a provider of output service shall be allowed to take Cenvat credit of the service tax leviable under Sections 66, 66A and 66B of the Finance Act. Sub-rule (4) of Rule 3 provides that the Cenvat credit may be utilised for the payment of service tax on any output service. 10. The issue in present appeals is similar to the issue considered by Larger bench in the matter of M/s South Indian Bank (supra) and held that insurance service provided by the Deposit Insurance Corporation to the banks is an input service and Cenvat credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering output services . Similarly in the matter of Commissioner of Central Excise, Bangalore Vs. PNB Metlife India Insurance Co. Ltd. [2015 (39) S.T.R. 561 (Kar.)], the issue that came up for consideration before the Karnataka High Court was whether an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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