2024 (1) TMI 180 - AT - Central Excise

CENVAT Credit - general insurance service related to building plant and machinery equipment computers workmen compensation group accident policy transit insurance etc. - HELD THAT - It is found that the cenvat credit on general insurance service availed by the manufacturing unit has been considered time and again in various judgments. Reliance can be placed in COMMISSIONER OF CENTRAL EXCISE BANGALORE VERSUS MILLIPORE INDIA (P.) LTD. 2011 (4) TMI 1122 - KARNATAKA HIGH COURT where it was held that It is to discharge a statutory obligation when the employer spends money to maintain their factory premises in an eco-friendly manner certainly the tax paid on such services would form part of the costs of the final products. In those circumstances the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof. Reliance also placed in M/S HINDUSTAN ZINC LTD VERSUS COMMISSIONER OF CENTRAL EXCISE JAIPUR 2014 (7) TMI 485 - CESTAT NEW DELHI where it was held that Group insurance of the employees against accident or sickness is the requirement of Section 38 of the Employees State Insurance Act 1948 which a manufacturer has to comply with and accordingly this service would have to be treated as a service used in or in relation to the manufacture of final products whether directly or indirectly as a manufacturer would not be allowed to carry on manufacturing operations unless he complies with the requirements of Section 38 of the Employees State Insurance Act 1948. From the above judgments it can be seen that in many cases the identical issue has been considered and it has been consistently held that the service tax paid on the general insurance service is admissible as cenvat credit as the service is directly or indirectly related to manufacture of the final product in the appellant s factory. Accordingly the issue is no longer res integra. The demand is not sustainable - Therefore the impugned order is set aside - Appeal is allowed.

Summary

Issues Involved:
1. Entitlement of the appellant to Cenvat credit on general insurance services.
2. Validity of the demand raised invoking the extended period on the grounds of limitation.

Summary:

Issue 1: Entitlement to Cenvat Credit on General Insurance Services

The appellant sought Cenvat credit on general insurance services related to building, plant and machinery, equipment, computers, workmen compensation, group accident policy, and transit insurance. The appellant argued that the issue is settled in various judgments, which allow Cenvat credit for service tax paid on general insurance services. Reliance was placed on several judgments, including *Dharti Dredging & Infrastructure Ltd vs. Commissioner of Central Tax, Secunderabad* (2022), *Coca Cola India Pvt Ltd vs. CCE, Pune* (2009), and *Reliance Industries Ltd vs. CCE & ST, Vadodara-I* (2019).

The Tribunal reviewed these judgments and found that the definition of "input services" is broad and inclusive, covering services used in connection with business activities. The Tribunal cited *CCE Bangalore vs Millopore India Private Limited* (2012), which held that services forming part of the cost of final products entitle the assessee to Cenvat credit. The Tribunal also referenced *Hindustan Zinc Ltd* (2015), emphasizing that insurance services integral to manufacturing operations qualify as input services.

The Tribunal concluded that insurance services for plant and machinery, goods in transit, and other business-related insurance are eligible for Cenvat credit, as these services are integral to the manufacturing business. The Tribunal noted that the cost of such services is included in the cost of production/value of goods, as certified by a Cost Accountant.

Issue 2: Validity of Demand Raised Invoking Extended Period

The appellant contended that the demand for Cenvat credit was raised by invoking the extended period, which is unsustainable due to the absence of fraud, collusion, suppression of facts, or contraventions with the intention to evade duty. The appellant argued that the availment of credit was clearly disclosed in the monthly ER-1 return, negating any suppression of facts.

The Tribunal, having decided the matter on merit, did not address the issue of limitation. The Tribunal found that the service tax paid on general insurance services is admissible as Cenvat credit, as these services are directly or indirectly related to the manufacture of the final product in the appellant's factory.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeal, affirming that the appellant is entitled to Cenvat credit on general insurance services. The demand raised was deemed unsustainable. The appeal was allowed with consequential reliefs, if any.

Pronounced in the open court on 03.01.2024.