Employee insurance as input service qualifies for CENVAT credit when linked to manufacturing activity.

Insurance cover taken for employees as a welfare measure in the course of manufacturing activity was treated as an input service under Rule 2(l) of the CENVAT Credit Rules, 2004. The relevant principle applied was that services availed by a manufacturer in connection with manufacturing operations during the relevant period qualify for CENVAT credit. On that basis, denial of credit on the employee insurance service was held unsustainable, and the insurance service was recognised as eligible for credit.

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Issues: Whether CENVAT credit was admissible on insurance cover taken for employees as an input service under Rule 2(l) of the CENVAT Credit Rules, 2004.

Analysis: The disputed insurance cover was taken for the welfare of employees in the course of manufacturing activity. The relevant question was already covered by the principle that services availed by a manufacturer in connection with manufacturing activity during the relevant period qualify as input service credit.

Conclusion: The denial of CENVAT credit was unsustainable, and the insurance service qualified for credit.

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