Cenvat credit on employee travel and insurance services remained admissible where used for project work and business travel.

Cenvat credit remained available on insurance service and air travel agency service where they were used for employees' business travel and project-related work in providing exported IT services. The amended exclusion in Rule 2(l) of the Cenvat Credit Rules, 2004 did not apply because the services were not shown to be for personal use or consumption of employees. Services with a direct business nexus and used in the course of providing output services continued to qualify as input services, so denial of credit was unsustainable.

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Issues: Whether Cenvat credit was admissible on insurance service and air travel agency service used for employees' business travel and project-related work, despite the amended exclusion in Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The disputed services were used for business purposes in the course of providing exported information technology services. The insurance cover related to group insurance and travel-related risks connected with overseas project work and was not shown to be for the personal use or consumption of employees. The air travel agency service was similarly used for business travel of employees and executives for execution of assigned projects abroad. The exclusion in Rule 2(l) applies to services used primarily for personal use or consumption, and the facts did not bring these services within that exclusion. The statutory framework and the cited authorities supported the view that services having a direct business nexus and used for provision of output services remain eligible input services.

Conclusion: Cenvat credit on the insurance service and air travel agency service was admissible and the denial of credit was unsustainable.

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