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2018 (7) TMI 842

nal Insurance Company Limited - denial on the ground that group insurance services provided by the appellant to his employees and their family member will constitute personal consumption of employees and the same will fall under exclusion clause of definition - Extended period of Limitation - Penalty u/r 15(2) of the CCR 2004. - Held that:- In view of the amendments made in the definition of input services in the year 2011, the phrase “activities relating to business” appearing in inclusive part of the definition has been deleted, and an exclusion clause specifying the services that are to be excluded from the definition of the input services has been added - Undisputedly the period under consideration is from July 2014 to October 2015. Hence it is to be examined whether the group insurance services provided by the appellant to his employees and their family member will be covered by the definition of “input services” as amended from 2011. - Adjudicating authority has analyzed the various provisions of the policy to determine whether the policy is primarily for personal consumption of employees or otherwise and has concluded that the said policy is for the personal consumpt .....

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the order in original passed by the Assistant Commissioner Central Excise & Customs, Akurdi Chinchwad divison Pune-I Commissionerate. 2.0 The facts in brief leading to present appeal is that Assistant Commissioner has vide his order in original has: i. disallowed the CENVAT credit amounting to ₹ 4,73,413/-, availed by the appellant on the Service Tax paid by them against the Insurance Policies issued by M/s National Insurance Co Ltd; ii. demanded interest on the amount of credit disallowed under Section 11AA; iii. imposed a penalty of the same amount under Rule 15(2) of CENVAT Credit Rules, 2004. 3.0 Have heard Shri Prashant Patankar Consultant on the behalf of appellant and Shri M R Melvin Superintendent (AR) for the Revenue. 4.0 Arguing on behalf of Appellant, Consultant submitted that appellant has taken the said group insurance policy for its employee for medical claim, personal and vehicle insurance from M/s National Insurance Company Limited and was paying the premium against the said policies and received invoices/ policy documents showing the amount of premium and service tax paid. Appellant has taken the credit of the Service Tax so paid. Since the said services .....

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tput services where credit on motor vehicle is permitted as capital goods . 1.9 On the same lines, a service meant primarily for the personal use or consumption of employees will not constitute an input service. A list of specific services has also been given by way of example in the definition. Most of these services constitute a part of the cost to company package of the employee and are provided either free of charge or on concessional basis to company employees. 1.10 Expression activities relating to business has been deleted and Business exhibition and legal services added in the list of services . 5.2 He further stated that the group insurance policy in this case not only covered the employees but also the family members of the employee, and hence the said policy can be termed as policy for consumption of the employee. Accordingly he submitted that the said service shall be hit by the exclusion credit in the definition of the Input Service and hence no CENVART Credit shall be available in respect of the said services. He relied upon the following decisions in his favour: i. SEMCO Electric Pvt Ltd vs Commissioner of Central Excise Pune - I [2012 (276) ELT 94 (T)] ii. John Dere .....

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he place of removal; but excludes services,- (A) specified in subclauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for- (a) construction 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) specified in subclauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee; From the above table it is evident that in view of the amendm .....

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vided by the appellant. As accompany, the appellant may provide many facilities or perks to their employees to retain them in the competitive job market, but such welfare measures do not automatically result in the CENVAT credit eligibility. The exclusion clause in the statutory definition of input service will prevail in such circumstances. 8.0 Adjudicating authority has in para 20, of his order analyzed the various provisions of the policy to determine whether the policy is primarily for personal consumption of employees or otherwise and has concluded that the said policy is for the personal consumption of employee. The said para 20 is reproduced below: 20 The various aspects of this policy have been examined to determine that whether the policy is primarily for personal consumption of the employees or not. The following aspects of the policy indicate that the policy is not for the personal use of employees: The fact that the insured s name in the policies is that of the notice Fact that the policy is providing insurance cover for the purpose of Accident, Death and Health which serves to provide risk cover to the notice in case of any unforeseen risk which the employees of notice .....

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mption of the employee. 10. During the course of arguments quite a number of case laws have be relied upon by both the sides. The details of the said case law is tabulated as below and the dealt as shown: Citation Dispute Period Remarks 2011 (23) STR 444 (Kar) Prior to 2011 Since the definition of Input service was amendment w.e.f 2011, these judgements not relevant. 2015 (38) STR 608 (T)] Prior to 2011 2017 (5) GSTL 393 (Tri) Prior to 2011 2016 (45) STR 397 (Tri)] Post 2011 Credit allowed holding that it was a legal requirement under ESI Act to provide insurance cover to employees. However as per the definition of input services under Rule 2(l), these services are excluded from definition of input services if meant primarily for personal consumption of employee. In the present case when the finding of fact has been rendered that the insurance services were meant primarily for personal consumption of employees, these decisions are not material and distinguishable. 2017 (47) STR 85 (Tri)] Post 2011 2012 (276) ELT 94 (T) Post 2011 CENVAT credit in all the said cases have been denied in respect of the insurance services on the ground that the said services are not used in or in relati .....

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rs of employees. Therefore the said decision is not relevant to the facts of this case. Therefore the credit is denied. 12. Thus in view of above discussions since the insurance services in the present case are primarily meant for the personal consumption of the employees hence they do not qualify to be input services under the definition of input services as amended in 2011. Hence credit in respect of the said insurance services is not admissible. 13. Appellant have raised the issue of limitation and have argued that extended period of limitation cannot be invoked in the present case and have relied upon the various decisions mentioned in para 4.2 (supra). Relying on the decision in case of NGK Infrastructure (supra) learned A R argued that extended period has been rightly invoked ion the present case. For invoking of extended period of limitation, it has to be shown that certain material facts were suppressed by the appellant, to claim the benefits that were not due to him. Adjudicating Authority has in para 27 of his order observed as follows: The knowledge of the fact relating to intent of the notice is available only with the notice. Further, the noticee claimed that they have .....

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