2015 (11) TMI 969 - AT - Service Tax

Tribunal Grants CENVAT Credit for Insurance Premium Tax, Overturns Prior Decision

Reliance Industries Ltd. Versus Commissioner, Central Excise & Service Tax (LTU), Mumbai

The Tribunal held that the appellant is eligible to avail CENVAT credit on service tax paid for insurance premiums for existing and retired employees, ... Denial of CENVAT Credit - whether the appellant is eligible to avail CENVAT credit of the service tax paid on insurance premium to the Insurance Company for Group Insurance and medi-claim policies taken for existing employees as well as for the retired employees; also on the service tax paid on the insurance premium for the policy taken for stocks lying in the foreign warehouses - Held that:- In respect of the service tax paid on the premium of the life insurance/medi-claim taken for the existing employees as well as the retired employees or the employees who had taken voluntary retirement is now eligible to avail CENVAT credit as this Bench in the appellant's own case in Appeal No. E/1283/2012-Mum as reported at [2015 (7) TMI 231 - CESTAT MUMBAI] has held that such credit is available relying on the judgement of the Hon'ble High Court of Karnataka in the case of Millipore India Ltd. - [2011 (4) TMI 1122 - KARNATAKA HIGH COURT ]. On an identical issue for the earlier period, this Bench having taken a view that the appellant is eligible to avail CENVAT credit, following the same, we hold that the appellant is eligible to avail CENVAT credit of the service tax paid on the premium of the insurance cover extended to their employees who are retired. - CENVAT credit sought to be denied by both the lower authorities is not in consonance with the law. Accordingly, we set aside the impugned order - Decided in favour of assessee. Issues involved:Whether the appellant is eligible to avail CENVAT credit of the service tax paid on insurance premium for Group Insurance, medi-claim policies for existing and retired employees, and policies for stocks in foreign warehouses.Analysis:The issue in these cases revolves around the eligibility of the appellant to claim CENVAT credit on the service tax paid on insurance premiums. The adjudicating authority and the first appellate authority differed on the eligibility criteria. They concluded that service tax on life insurance/medi-claim for existing employees is eligible for credit, but the same for retired employees is not covered under the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. Additionally, service tax on insurance premiums for stocks in foreign warehouses was deemed ineligible as it was considered beyond the place of removal of final products and not falling under the definition of 'input services' under the Rules.Regarding insurance premiums for existing and retired employees, the Tribunal held that the appellant is eligible to avail CENVAT credit based on previous judgments and the interpretation of relevant rules. The Tribunal cited precedents and clarified that the appellant can claim credit for insurance premiums paid for retired employees as well. On the issue of service tax credit on insurance premiums for stocks in foreign warehouses, the lower authorities were found to have misdirected their findings. The Tribunal highlighted that such services are covered under the Taxation of Services Rules and clarified that insurance services fall within the scope of these rules, despite being excluded under specific clauses.The Tribunal further supported its decision by referencing a High Court judgment and a previous Tribunal case to emphasize the applicability of tax laws to imported services. It was noted that the tax liability on services used in relation to business or commerce should be considered under the Taxation of Services Rules. The Tribunal's analysis also included a detailed discussion on the place of rendering services and the eligibility of service tax credit based on the nature of services provided in connection with manufacturing activities.In conclusion, the Tribunal found that the denial of CENVAT credit by the lower authorities was not in accordance with the law. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief, if any. The detailed analysis and application of legal principles led to the decision in favor of the appellant, ensuring compliance with relevant tax laws and regulations.