2017 (6) TMI 754 - AT - Central Excise

Tribunal rules in favor of assessee on CENVAT credit challenge, upholds Revenue's decision on statutory benefits

Commissioner of Central Excise, Customs Service Tax, Hyderabad-III Versus Zuari Cement Ltd And (Vice-Versa)

The Tribunal ruled in favor of the assessee regarding the challenge to the rejection of CENVAT credit on workmen compensation insurance, allowing the ... CENVAT credit - workmen compensation insurance paid by the assessee to their labour contractors - Held that: - reliance placed in the case of M/s Hydus Technologies India Pvt Ltd. Versus CCE, C & ST, Hyderabad-II [2017 (2) TMI 538 - CESTAT HYDERABAD], where it was held that in the definition of input services it is mentioned that life insurance, health insurance etc., are excluded it is subject to the condition that such services are primarily for personal use or consumption of employee - credit allowed. Manpower recruitment and supply agency services - statutory benefits extended by the service provider to his employees and the said amounts reimbursed by the assessee - Held that: - An identical issue came up before this Bench in the case of Ultratech Cement Ltd. Vs. CC, CE&ST, Hyderabad-IV [2016 (12) TMI 381 - CESTAT HYDERABAD], where it was held that It has to be stated that such contributions are mandatory and the appellant can avail the services only by making payment of such mandatory obligations - credit allowed. Appeal allowed - decided in favor of assessee. Issues:1. Challenge to rejection of CENVAT credit on workmen compensation insurance.2. Contesting eligibility for CENVAT credit on statutory benefits extended to employees.Analysis:1. The first issue pertains to the challenge faced by the assessee regarding the rejection of CENVAT credit on workmen compensation insurance. The appellate authority had denied the claim of CENVAT credit on the service tax paid on workmen compensation insurance. However, the Tribunal observed that the assessee had taken insurance on contract workmen as per the Employees State Insurance Act, 1948, and the service tax liability discharged by the service provider was availed as CENVAT credit, in compliance with the CENVAT Credit Rules, 2004. The Tribunal noted that the argument raised against availing CENVAT credit post-April 2011 was previously dismissed in a similar case by the Tribunal. Therefore, the Tribunal allowed the assessee's appeal and set aside the impugned order.2. The second issue revolves around the eligibility of the assessee to avail CENVAT credit on statutory benefits extended to employees. The service provider had discharged service tax under the category of manpower recruitment and supply agency services, including statutory payments made to employees. The Tribunal referred to a previous case where a similar issue was addressed, and the Tribunal had dismissed the Revenue's contentions and allowed the appeals. The Tribunal found that the ratio from the previous decision was directly applicable to the current case. Consequently, the impugned order was upheld in favor of the Revenue in the appeal filed by them.In conclusion, both appeals were disposed of based on the specific issues involved in each case, with the Tribunal ruling in favor of the assessee in the first issue related to workmen compensation insurance and in favor of the Revenue in the second issue concerning statutory benefits extended to employees.