MODVAT Credit of service tax paid under the premium of Key_man Policy

[Anil Roy]

We have a issue with the Central Excise Department. The matter is as under:

In F-Y 2008-2009 we have paid a sum of rupees towards key man insurance policy of one of the executive director of our company (Company is engaged in manufacturing of Auto Component), in which service tax is also included, and the service tax paid under the said premium, CENVAT CREDIT has been claimed by us under central excise return.

Now, in departmental audit the amount of CENVAT CREDIT claimed by us, has not allowed by the Superintendent of Excise & Customs and he ask for any circular / notification / Case Law in this regard.

Can any body get me any help in this regard?

AI Summary

Input service classification: whether keyman insurance premiums qualify for CENVAT credit depends on business relation analysis.
The issue is whether CENVAT credit of service tax on a keyman insurance premium qualifies as an input service under the pre amendment Rule 2(l). One view argues that the "includes" limb and the illustrative list of "activities relating to business" admit keyman insurance as business related protection, supported by circulars and tribunal decisions allowing credit for company provided employee services. The opposing view invokes the principle that services for human consumption are not input services and notes a post 2011 amendment that narrows eligibility, creating a material risk to such credit claims.