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TMI Blog2025 (4) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... request in the miscellaneous application No.86528 of 2024. The prayer made by the Revenue as well as the appellants are considered and accordingly, the Registry is directed to incorporate the following changed name and address of the respondent in the appeal records for the purpose of disposal of the appeal:- "Commissioner of Central Goods Service Tax & Central Excise, Navi Mumbai Commissionerate, 16th Floor, Satra Plaza, Sector -19D, Palm Beach Road, Vashi, Navi Mumbai - 400 705". 3.1 Denial of CENVAT Credit of Service Tax paid on sixteen different items of services viz., health, general insurance of CISF security services, medical insurance of employees, outdoor catering, maintenance and repair services etc. is the subject matter of present dispute. During the scrutiny of invoices issued by the service providers to the appellants, on the basis of which CENVAT credit of service tax has been taken by the appellants during the period October, 2013 to March, 2014, the department had objected to credit taken on certain services on the ground that these do not appear to be covered by the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004 (CCR of 2004). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of petroleum and petroleum oil products (POL) by processing it in their refinery at Mahul, Mumbai, where crude petroleum is obtained through pipelines from the port jetties, offshore platforms are subjected to refining process. As the products are hazardous in nature, the appellants are required to comply with safety, security aspects and the entire refinery plant is required to be maintained for compliance with environmental protection and regulatory requirements of Petroleum & Natural Gas Regulatory Board. In the manufacture of such final products, the appellants avail CENVAT credit of duties and tax paid on input, input services and capital goods. 4.2 He further stated that CENVAT credit availed in respect of medical/ health insurance coverage of the family members of employees have already been reversed in January/February 2014, prior to the issue of SCN dated 07.11.2014 and sufficient balance of credit was available in their CENVAT Credit account, details of which was informed to the department and also verified by the Divisional Assistant Commissioner on 28.04.2015. Hence, he pleaded that no penalty is imposable on such amount reversed by the appellants on their own, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are covered under 'repairs and renovation'. (vii) video imaging services, are used for visual inspection of inaccessible location within the factory, during natural calamities. (vii) program service are engaged as a part of CSR activity in the refinery. Therefore, on the above basis, he justified that the appellants are eligible for CENVAT credit and claimed that the impugned order is not sustainable to the extent it has denied the credit on these input services. 5. Learned Advocate relied upon the following judgments in support of their stand :- (i) Dharti Dredging & Infrastructure Ltd. Vs. Commissioner of Central Tax, Secunderabad GST - 2022 (59) G.S.T.L. 171 (Tri. - Hyd.); (ii) Ganesan Builders Ltd. Commissioner of Service Tax, Chennai - 2019 (20) G.S.T.L. 39 (Mad.); (iii) Hindustan Petroleum Corporation Ltd. Vs. C.C.E., Visakhapatnam- I - 2017 (47) S.T.R. 33 (Tri.- Hyd.); (iv) Hindustan Petroleum Corporation Ltd. Vs. Commissioner of C. Ex., Mumbai-II - 2018 (12) G.S.T.L. 305 (Tri.- Mumbai) 6. Learned Authorised Representative (AR) appearing for the department, on the other hand, submitted that the definition of 'input services' under Rule 2(l) ibid has under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; but excludes- (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for- (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or (B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input service should not fall under the exclusion clauses mentioned in the third category (iii) above. 9.1 In respect of group medical/health insurance policy taken for their employees, we find that the technicians of prescribed threshold limit of wages/salary, who are required to work in the refinery, were required to be insured in terms of Section 38 of Employees' State Insurance Act, 1948, for ensuring the compensatory benefits to employees in case of sickness, maternity and employment injury. The relevant provision reads as follows: "38. All employees to be insured: Subject to the provisions of this Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act." Therefore, the appellants are mandatorily required to take medical/health insurance for their employees in compliance with the above statutory requirement. However, for those employees who are not covered by the ESI scheme, general medical/health insurance has been taken by the appellants. We have perused the insurance coverage under a sample copy of the insurance policy produced by the appellants dated 01.04.2012 given by the insurer M/s New Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees' State Insurance Act, 1948, mandates that subject to the provisions of the Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. May be the employees also have to contribute but the employer is under an obligation to take an insurance policy and contribute his share. Therefore, the said Group Insurance Health Policy taken by the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition. 4.3 Learned AR argued that apart from insurance the employees are also availing the medical allowances and therefore medical insurance risk coverage is nothing but welfare of the employees. 4.4 We have considered the rival submissions. Learned Counsel has argued that the insurance is strictly in terms of Section 38 of ESI Act. In terms of the decision of Hon'ble Karnataka High Court (supra), so long as the insuranc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce coverage to the employees is concerned in the course of employment if the employees suffer injury or dies, there is a vicarious liability imposed on the employer to compensate the employee. If the employer employs its own transportation facility in order to cover the risk which also includes the risk of workers who are covered in that statutory establishment, he has to take the insurance policy with which the vehicle cannot go on the road. Even for entering into the premises to meet the obligations under the workmen's compensation Act he has to obtain the Insurance Policy covering the risk of the employees. The employee State Insurance Act takes care of the health of the employees also and casts an obligation on the employer to provide insurance services. Under these circumstances, this Group Insurance Health Policy though is also a welfare measure is an obligation which is cast under the Statute that the employer has to obey. Section 38 of the Employees State Insurance Act, 1948, mandates that subject to the provisions of the Act, all employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. May be the employees als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f shall also be considered as integral part of the security services which are essential 'input service' required to be used in manufacture of petroleum products. Further, 'security' services have also been specifically provided in the inclusive part of the definition of 'input service' under Rule 2(l) ibid. Therefore, we find that Service Tax paid on medical/health insurance services for CISF Security for an amount of Rs.10,06,493/- as discussed above are eligible to be availed of as CENVAT credit. 9.5 As regards the service tax paid on maintenance of gardens, the learned Advocate for the appellants had submitted that it is a mandatory requirement under the State Pollution Control Board to maintain gardens and provide green space for 33% of their refinery plant area. In this regard, we find that Maharashtra Pollution Control Board vide Circular dated 30.06.2016 had instructed all industries to have tree planation on 33% of open area, the extract of which is as below: In view of the mandatory nature of services that is required to be engaged by industry in carrying out their manufacturing activity, we find that the services engaged by the appellants in respect of maintenance of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot find any reason to differ with the findings of the learned adjudicating authority, in rejecting the CENVAT credit taken as ineligible input service to the extent of an amount of Rs.9,03,065/- on the above services. 10. As regards the service tax paid on insurance premium in respect of health/medical insurance of family members/dependents of the employees, the appellants have already reversed the ineligible CENVAT credit prior to the issue of SCN, on their own. These have been specifically recorded in the impugned order as follows: "16.3.... (i) The Noticee submitted that Rs.11,36,248/- included in the Annexure, has been considered twice in the Annexure A-3 for the month of October 2013, which had already been reversed in Jan 2014 vide Entry No.4011. This fact has been verified and confirmed by Division vide F. No. V. Adj. (SCN issued)3-25/Ch-II/2013-14/126 dated 20.01.2015 from Assistant Commissioner, Chembur-II Division and therefore the same has to be appropriated in the total demand raised under this Annexure... (iv) In respect of Rs.53,97,579/- the assessee mentions that it is for medical cover for the family of the employees. The assessee submitted that the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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