2015 (12) TMI 1269 - AT - Service Tax

Appellant granted CENVAT credit for transit insurance, insurance service & photography/validation service.

The Tribunal ruled in favor of the appellant, allowing CENVAT credit for transit insurance, insurance service, and photography/validation service. The ... Denial of CENVAT credit on photography / validation service, transit insurance service and insurance service - Nexus with manufacturing activity - Held that:- as regards the “transit insurance” and “insurance service”, these are in respect of finished goods and goods exported which are manufactured and within the factory in respect of business of manufacture. If that so, these services are used by the appellant for his business activity. In my considered view the judgement of the Hon'ble High Court of Bombay in the case of Deepak Fertilizers & Petrochemicals Corpn. Ltd. - [2013 (4) TMI 44 - BOMBAY HIGH COURT] will squarely cover the issue in favour of the assessee. As regards the service tax credit availed on photography/ validation service at site, I find that these services were availed by appellant for installation of equipments/machineries on the site and to ascertain the same in the consonance of the design and drawing submitted by their clients. It is recorded by the lower authorities that the appellant had specifically mentioned that these amounts of service tax are included in the cost of final product, though being undertaken at the site but are in respect of business activity. I find this Bench in the case of Reliance Industries Ltd. [2015 (11) TMI 100 - CESTAT MUMBAI] has relying upon the judgement of the Hon'ble High Court in the case of Ultratech Cement, held any amount which has been accounted as an expenses and considered in costing of final products, credit should be allowed - impugned order denying CENVAT credit is incorrect and liable to be set aside - Decided in favour of assessee. Issues Involved:Denial of CENVAT credit on photography/validation service, transit insurance service, and insurance service.Detailed Analysis:Issue 1: Denial of CENVAT credit on transit insurance and insurance service- The appellant availed CENVAT credit on transit insurance and insurance service, but the Revenue contended that these services were not directly or indirectly connected with the manufacturing activity.- The Tribunal found that these services were used by the appellant for business activity related to manufacturing, citing the judgment of the Hon'ble High Court of Bombay in a similar case.- The definition of 'input service' under Rule 2(l) includes services used directly or indirectly in or in relation to the manufacture of final products. The Tribunal held that the appellant was entitled to avail of CENVAT credit for these services.- The Tribunal concluded that the denial of CENVAT credit was incorrect and set aside the impugned order, allowing the appeal.Issue 2: Denial of CENVAT credit on photography/validation service- The appellant availed CENVAT credit on photography/validation service for installation of equipment/machinery on-site, which was considered a business activity.- Lower authorities noted that the service tax amounts were included in the cost of the final product. The Tribunal referred to a previous case involving Reliance Industries Ltd. and the judgment of the Hon'ble High Court in the case of Ultratech Cement to support allowing credit for such expenses.- Relying on precedent and the nature of the services provided, the Tribunal found the denial of CENVAT credit for photography/validation service to be incorrect.- The impugned order was set aside, and the appeal was allowed based on the findings related to this issue.Conclusion:The Tribunal ruled in favor of the appellant, allowing CENVAT credit for transit insurance, insurance service, and photography/validation service, based on the interpretation of relevant rules and previous judgments. The decision highlighted the importance of services directly or indirectly connected to manufacturing activities and their eligibility for CENVAT credit under the law.