2013 (10) TMI 1159 - AT - Service Tax

Tribunal Rules on Cenvat Credit for Insurance, Emphasizes Compliance

M/s. Sona Koyo Steering Systems Ltd. Versus CCE & ST, Ltu Delhi

The Tribunal addressed the denial of Cenvat credit for Service Tax paid on group medical insurance of employees and their dependents, noting the lack of a ... Cenvat Credit – input services - service tax paid on group insurance policy of Employees including family members - Waiver of pre-deposit - Held that:- The issue of Medical Insurance Employees and Product Liability Insurance stands fully covered by the precedent decision of the Tribunal, there is no direct decisions covering the Insurance of the dependent of the employees - it is clear that there is no legal mandatory requirement of law to get the family of the employees in insured – the issue is an arguable and contentious issue. The entire credit was availed by the appellant by reflecting the same in their statutory record as also in the quarterly reports filed with their jurisdictional central excise authorities - Though the demand in the case of appeal no. e/57813/2013 is within the limitation period but the same in the case of e/58223/2013 is barred by limitation leaving the balance of Rs. 4.5 lakhs approximately within the limitation period - the applicant is directed to deposit a total amount of Rs. 6.50 lakhs as condition of hearing of their appeal - Subject to the deposit, the pre deposit of balance dues and penalty stand dispensed with and its recovery stayed during the pendency of the appeal – Partial stay granted. Issues:1. Denial of Cenvat credit for Service Tax paid on group medical insurance of employees and their dependents.2. Eligibility of Cenvat credit for Product Liability Insurance.3. Legal requirement for insuring dependents of employees.4. Limitation period for the demand of Cenvat credit.Analysis:1. The judgment addresses the denial of Cenvat credit to the appellant for Service Tax paid on group medical insurance of employees and their dependents. The Tribunal noted that while there are precedents supporting the availability of credit for Medical Insurance of Employees, there is no direct decision regarding the insurance of dependents. The Tribunal acknowledged the legal provisions but found the issue contentious due to the lack of a clear legal mandate for insuring dependents.2. Regarding the eligibility of Cenvat credit for Product Liability Insurance, the Tribunal referred to various decisions supporting the credit for insurance against liability arising from employees' death, injury, or third-party liability due to product defects. Precedents cited included cases where such insurance was considered an eligible cenvatable input service, emphasizing the importance of previous Tribunal decisions in establishing the eligibility criteria.3. The judgment highlighted the appellant's compliance with statutory record-keeping and reporting requirements for availing the Cenvat credit. While the demand for one appeal fell within the limitation period, the demand in another appeal was time-barred. Consequently, the Tribunal directed the appellant to deposit a specified amount within a set timeframe as a condition for hearing the appeal, with the remaining balance exempted from pre-deposit and recovery during the appeal's pendency.4. In conclusion, the Tribunal disposed of both stay petitions by addressing the issues of Cenvat credit denial for medical insurance, eligibility of credit for product liability insurance, legal requirements for insuring dependents, and the limitation period for the demand. The judgment provided a detailed analysis of the legal precedents, statutory provisions, and compliance aspects, ensuring a comprehensive review of the issues involved in the appeals.