Tribunal upholds CENVAT credit for insurance services in employee group scheme.

The appeal challenging the grant of CENVAT credit for insurance auxiliary service was dismissed by the Tribunal. The respondent, a bulk drug manufacturer, introduced a group insurance scheme for employees, which the department argued did not qualify as an input service. Despite the department's appeals against previous decisions, the Tribunal upheld the respondent's eligibility based on precedents from the Karnataka High Court. Citing cases like Stanzen Toyotetsu and Millipore India, the Tribunal affirmed the decision in favor of the respondent, allowing the CENVAT credit for insurance services covering risks to employees.

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Issues:
Appeal against grant of CENVAT credit for insurance auxiliary service.

Analysis:
The appeal was filed by the department challenging the grant of CENVAT credit to the respondent for insurance auxiliary service. The respondent, engaged in the manufacture of bulk drugs, introduced a group insurance scheme covering employees' risks. The department denied the CENVAT credit, arguing that the service did not qualify as an input service under Rule 2(l) of the CENVAT Credit Rules 2004, considering it as a welfare scheme for directors and employees. The original authority disallowed the credit, but the Commissioner (Appeals) allowed it, citing various decisions including ITC Ltd. Vs. CCE, Hyderabad and others. The respondent also claimed support from these decisions in their written submissions.

In response, the department submitted that they had appealed against certain Tribunal orders and a High Court decision, seeking to discount their precedent value. However, the learned Superintendent (AR) acknowledged that appeals filed by the department in some cases had been dismissed by the Hon'ble Karnataka High Court. The bench noted that in a similar case involving the same assessee, the department's appeal had been decided against them based on previous Tribunal decisions, which were affirmed by the High Court. The respondent also relied on Commissioner Vs. Dr. Reddy's Laboratories Ltd. in their written submissions.

The Tribunal found a strong case for the respondent based on the decisions of the Hon'ble Karnataka High Court regarding the eligibility of manufacturers to claim CENVAT credit for insurance services covering risks to employees. The High Court upheld the Tribunal's view in cases like Stanzen Toyotetsu and Millipore India, which were followed in the impugned order. Consequently, the department's appeal was dismissed, affirming the decision in favor of the respondent.

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