Deposit insurance premium qualifies as input service for CENVAT credit, making service tax on the premium admissible.

Service tax paid on premium to the Deposit Insurance and Credit Guarantee Corporation for insuring bank deposits is admissible as CENVAT credit because deposit insurance qualifies as an input service. The analysis follows the Larger Bench view and the assessee's earlier case, both recognising the service as creditable under the CENVAT scheme. On that basis, the disallowance was held unsustainable, and the demand, interest and penalty were set aside with consequential relief.

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Issues: Whether the Service Tax paid on the premium paid to the Deposit Insurance and Credit Guarantee Corporation for insuring bank deposits is eligible for CENVAT credit.

Analysis: The credit claim was examined in the context of the statutory scheme under which insured banks pay premium to the Deposit Insurance and Credit Guarantee Corporation for deposit insurance. The issue had already been decided by the Larger Bench as well as in the assessee's own earlier case for a different period, both holding that such deposit insurance service qualifies as an input service and that the Service Tax paid thereon is creditable.

Conclusion: The credit of Service Tax paid on the premium paid to the Deposit Insurance and Credit Guarantee Corporation is eligible and the disallowance was unsustainable.

Final Conclusion: The demand, interest and penalty were set aside and the appeals succeeded with consequential reliefs.

Ratio Decidendi: Deposit insurance service availed by a bank qualifies as an input service for CENVAT credit purposes, and Service Tax paid on the premium for such insurance is admissible credit.

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