TMI Blog2017 (10) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... t of providing the consultancy or other professional services, where the assessee has to safeguard itself against unforeseen legal damages/costs due to negligence or other bonafide mistakes of the employees/partners. Hence, the professional indemnity insurance service is an essential ingredient for providing the output service and has direct nexus with the providing of output service. From the perusal of the insurance cover placed on record by the respondent, the cover is not for a particular employee but is a general insurance cover taken by the assessee for the firm and any partner, member or employee to indemnify against legal liability for damages, defence costs etc. As the insurance cover is not meant for personal use or private con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Credit Rules, 2004. He further argued that professional indemnity insurance service is neither covered under main definition of input service nor by inclusive part. He argued that the Cenvat credit is available only to these services which are used during provision of service and before delivering it to the recipient and not thereafter. Ld.AR also argued that the impugned service was used only when there was professional mistake or negligence on the part of the employees. He pointed out that case laws relied upon by Ld.Advocate are for period prior to 1.4.2011. 3. Ld.Advocate for the appellant explained the nature of liability insurance and submits that the professional indemnity insurance service is covered both by main portion as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) in the following paragraphs extracted from the Order-in-Appeal: The Definition of Input Service Rule 2 (I) of Cenvat Credit Rules, 2004 defines the Input Service w.e.f.01.07.2012. (I) Input service means any service, (i) used by a provided of taxable service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernization, 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service for different relevant period makes it amply clear that in order to quality as Input service, any service used by a provider of output service should satisfy the following conditions: It should fall under main part or inclusive part of the definition of input service. It should not be covered in the exclusion part of the definition. Further, professional indemnity insurance is form of liability insurance that helps in safeguarding the professional advisor and service providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such civil lawsuit. The coverage focuses on alleged failure to perform, on the part of financial loss caused by error or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot fall in the exclusion clause of the definition of the input service. 9. On the argument of the Revenue that it is used when output service is complete, I find that the commission for such service is paid in the beginning and it provides continuous assurance to the assessee throughout the process of delivery of the output service. Even though the need for its use may come after the output service is delivered, the genesis for use lies in the assurance it provides while service is being delivered. Hence, it is erroneous to say that the service is provided only after output service is delivered. 10. In view of above, I find that there is no infirmity in the impugned order of the Commissioner (Appeals) and the same is upheld. 11. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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