Cenvat credit for employee welfare services upheld where insurance and transport were linked to manufacturing activity.

Cenvat credit on service tax paid for employee life insurance and employee transportation was treated as admissible because such welfare services were found to have sufficient nexus with manufacturing activity and were regarded as input services in earlier binding precedent. The employer's statutory obligation to provide employee insurance further supported the conclusion that the services were not extraneous to the business process. The revenue's challenge therefore failed.

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Issues: Whether Cenvat credit was admissible on service tax paid for life insurance policy of employees and for vehicles used to transport employees.

Analysis: The services in question were treated as input services in earlier decisions relied upon by the Commissioner, including binding precedent recognising that employee-related welfare services such as insurance and transportation can have a sufficient nexus with manufacturing activity. The statutory obligation placed on the employer to provide employee insurance was also noted as supporting the conclusion that such services were not extraneous to the business process.

Conclusion: Cenvat credit on the impugned services was held admissible and the revenue's challenge failed.

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