Re-insurance as input service supports Cenvat credit, while adjustment-based service tax demand requires verification before confirmation.

Re-insurance premium service tax was held admissible as Cenvat credit because re-insurance is a statutory and integral part of the insurance business with a direct nexus to the output insurance service; denial of credit would defeat the Cenvat scheme and create double taxation. The demand based on alleged excess adjustment of service tax was not finally confirmed because the record required verification of challans and ST-3 returns to determine whether earlier excess tax had been validly adjusted against later liability. The credit issue was decided in favour of the assessee, while the adjustment-related demand was remanded for de novo adjudication.

---

---

Issues: (i) Whether service tax paid on re-insurance premium is eligible as Cenvat credit as input service for providing insurance output service. (ii) Whether the demand raised on account of alleged excess adjustment of service tax required verification or stood sustainably confirmed.

Issue (i): Whether service tax paid on re-insurance premium is eligible as Cenvat credit as input service for providing insurance output service.

Analysis: Re-insurance was treated as an integral part of the insurance business because it is a statutory requirement and continues with the insurance policy. The service bears nexus with the output insurance service and its tax burden forms part of the input chain, so denial of credit would defeat the CenvAT scheme and result in double taxation.

Conclusion: The re-insurance premium qualifies as input service and Cenvat credit is admissible. The demand on this issue is set aside in favour of the assessee.

Issue (ii): Whether the demand raised on account of alleged excess adjustment of service tax required verification or stood sustainably confirmed.

Analysis: The claim depended on verification of challans and ST-3 returns to ascertain whether excess tax paid in earlier months was validly adjusted against later liabilities. The record before the Tribunal was not sufficient for final factual verification, and the adjudicating authority had confirmed the demand without proper examination of the materials.

Conclusion: The matter on this demand is remanded for necessary verification and de novo adjudication.

Final Conclusion: The appeal succeeds on the re-insurance credit issue and is remitted on the adjustment-related demand, leaving the latter open for fresh adjudication.

Ratio Decidendi: Re-insurance taken as a statutory and integral part of the insurance business constitutes input service where it has nexus with the output insurance service, and an adjustment-based tax demand must be verified on the relevant returns and payment records before confirmation.

---