Cement manufacturer wins appeal on cenvat credit for insurance premiums

The appellant, a cement manufacturer, appealed against the disallowance of cenvat credit by the Department on service tax paid for insurance premiums of company vehicles and workers' insurance. The judge found in favor of the appellant, holding that cenvat credit for service tax on insurance premium for company vehicles is admissible if the vehicles are used for the company's work. Additionally, group and personal accident insurance for workers were deemed eligible for cenvat credit. The judge waived the requirement for a pre-deposit of cenvat credit demand, interest, and penalty, staying recovery until the appeal's final disposal.

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Issues: Eligibility for cenvat credit of service tax paid on insurance premium for company vehicles and workers' insurance.

Analysis:

The appellant, a cement manufacturer, appealed against the disallowance of cenvat credit by the Department on service tax paid for insurance premiums of company vehicles and workers' insurance. The Department contended that there was no nexus between the insurance services and the manufacture of the final product. The Commissioner (Appeals) upheld the disallowance, leading to the filing of appeals and stay applications.

During the hearing, the appellant's counsel referred to previous Tribunal judgments in favor of cenvat credit eligibility for similar cases. It was argued that the issue had already been settled in the appellant's favor based on precedents like HEG Ltd. vs. Commissioner of Central Excise and Hindustan Coca Cola Beverages P. Ltd. vs. Commissioner of Central Excise.

The appellant's counsel requested the waiver of cenvat credit demands, interest, and penalties pending the appeal's disposal. The Department's representative opposed the stay applications, reiterating the Commissioner (Appeals)'s findings in the impugned orders.

Upon reviewing the submissions and records, the judge, Mr. Rakesh Kumar, noted that cenvat credit for service tax on insurance premium for company vehicles is admissible if the vehicles are used for the company's work, as per the Tribunal's precedent in the case of DCW Ltd. Regarding group and personal accident insurance for workers, the Tribunal had previously held it eligible for cenvat credit in the case of HEG Ltd.

Consequently, the judge found a strong prima facie case in favor of the appellant. The requirement for a pre-deposit of cenvat credit demand, interest, and penalty was waived for the appeal's hearing, and recovery was stayed until the appeal's final disposal. The judgment was pronounced in open court by Mr. Rakesh Kumar.

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