TMI Blog2008 (1) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 was issued invoking the provisions of Section 11A of the Central Excise Act, 1944 (hereinafter referred to as the Act) and alleging contravention of Rule 3 of the Cenvat Rules calling upon them as to why wrongly availed Cenvat credit of Rs. 3,73,932/- should not be demanded and recovered from them in terms of Rule 14 of the said Rules, read with Sections 11A 11B of the Act and why penalty should not be imposed under Rule 15 of the Rules read with Section 11AC of the Act; that on adjudication the demand raised in the notice was confirmed on the ground that credit availed towards Service Tax paid on medi-claim for staff, insurance for staff, health-club and insurance for workers cannot be considered as input services used by the appellant directly or indirectly in or in relation to the manufacture of final product and clearance of final product from the place of removal as the above services were offered to the staff members towards their welfare which is mandatory to the appellant under various laws/Act such as Labour Law/Factory Act etc., hence credit amounting to Rs. 2,01,430/- is not admissible. As regards the service namely insurance for computers, he held that since the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput services means, inter alia, any services used by the manufacturer whether directly or indirectly in or in relation to manufacture and clearance of final product from the place of removal ; (viii) that since the services of transit insurance pertains to clearances of the final product from the place of removal, they are entitled to take credit of the entire Service Tax paid, which is covered in the first part of the definition itself; (ix) that the department, ignoring the first part of the definition, has jumped upon the second part and come to a conclusion that the services of transit insurance pertaining to services after their clearance from the place of removal is not input service, which is not correct; (x) that all the services on which credit of Service Tax is availed and utilized towards payment of final product would get covered under the expression activities relating to business . Without the aforesaid service, the business cycle of manufacture is not complete and since, these are activities relating to business, the same would be covered under the expression input service under Rule 2(l) of the Rules ; (xi) that the expression includes ... activities re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personal hearing and write-up on each services availed, furnished under their letter No. PVPL/COM/RS/2008, dated 14-1-2008. After waiving the pre-deposit, I proceed to take the main appeal itself. The issue to be considered in the appeal is whether the appellant is entitled to avail credit of Service Tax paid on the following services as input services : 1. Insurance paid towards medi-claim of staff 2. Insurance for staff 3. Health club 4. Insurance for workers 5. Insurance for computers 6. Transit insurance 7. Security Services. 4.1 The adjudicating authority has held that the first five services relate to welfare of the staff and thus by way of any stretch of imagination, these services cannot be considered as input services used by the appellant directly or indirectly in or in relation to the manufacture of final product. Accordingly, he rejected the credit. As regards service namely insurance for computers he rejected the credit amounting to Rs. 17,493/- as the computers were not installed in the factory premises. As regard transit insurance he rejected on the ground that the appellant failed to establish and were unable to give any evidence regarding place fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention it can be seen that except the security services all the services were directly or indirectly used in the manufacture of final product. According to the definition contained in Rule 2(l)(ii) of the Rules, any input services used by the manufacturer whether directly or indirectly in or in relation to manufacture of final product is entitled for availment of credit. The objection of the adjudicating authority is that the insurance claim covers only the welfare of the staff/employees of the factory and thus by no stretch of imagination the same can be considered as input services. What has to be seen is whether those services were utilized in the course of manufacture or not. In the instant case it is observed from the documents produced by the appellant that the insurance covering staff/management staff/employees/workers were taken by the appellant and there is no dispute that those employees of the appellant company were not working in the factory/office. It is to be noted that nothing can move on the earth without the involvement of human agency. Therefore, the insurance cover, covering various situations, mentioned above will certainly fall under input services, which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax paid on the transit insurance also quality as input in the above definition. As the transit insurance covers transit of raw materials/components for manufacture of final products, the question of denial will definitely go against the spirit of Cenvat Rules. 4.4 As regard the security services, the appellant is not entitled to claim Service Tax paid on security services since the same service was utilized only to guard the materials which were cleared from the factory. 5. The lower authority has also held that the appellant had never declared to the department the services on which they were availing Cenvat credit, as such they have wilfully suppressed the fact with the intent to evade duty and hence extended period as provided under proviso to Section 11A read with provisions to Rule 3 of Central Excise Rules, 2004, is rightly applicable. Whereas the appellant contended that the availment of credit was reflected in the monthly returns and they have also provided requisite information along with the said return that Central Excise records were being audited by the audit parties as well as CERA and no objection were raised and/or any adverse remarks were made till March, 2006, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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