Input Service credit - Insurance policy for the Barges & Tugs -Reg

[vinay wakde]

Our company owned Barges & Tugs which are used for bringing the indegenious raw materials from various ports & also used for the transporation of finished goods from jetty to high seas in case of Export. The company has taken Insurance policy such as Hull & Machinery Policy, War Risk policy etc. for their  Barges & tugs & also Third party Liability policy to cover the risk of damage the jetty by third party Barges which are arriving from other ports.  We are registered under service catagory 'Supply of Tangible Goods ' under Service Tax. We are service receiver as well as service provider under the said catagory.

Kindly clarify whether the CENVAT credit to the extent of Service Tax paid on referred Insurance policy is eligible or not ?

Regards,

VINAY

[YAGAY andSUN]

If it enhance the quality of output services then you can avail the CENVAT Credit on input services.

[Mahir S]

The above insurance services are covered under the definition of “input service”, and the same are the services in relation to the business of your company.

Just close your eyes and avail cenvat credit for such service tax paid on insurance policy.

There are also various judgements in your favour.

AI Summary

CENVAT credit eligibility for insurance services: input-service characterisation enables credit where insurance supports business output. Insurance taken for company barges and tugs (Hull & Machinery, War Risk, Third Party Liability) can qualify as input service for the business of supplying tangible goods; where these insurance services relate to the business and enhance or support the quality of output services, CENVAT credit on service tax paid may be availed, a position supported by adviser commentary and favourable judicial decisions.