TaxTMI 
TaxTMI 
2010 (4) TMI 740
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....t, 1994 (the Act); and (iii) Penalty of Rs. 6,44,00,000/- imposed on the appellants under Section 78 of the Act. The period of dispute is from March 2005 to September 2008. The demand pertains to inadmissible credit availed by the appellants of service tax paid on various services such as insurance, outdoor catering, health and fitness, event management, house keeping service, etc. The impugned order is challenged on various grounds. The Commissioner wrongly found that the services involved were not relatable to the taxable out put services. The services involved enhanced the efficiency of the employees or their welfare; these promoted the business of the assessee. The Commissioner erred in denying the credit of tax paid on advertisement and sales promotion service on the ground that these expenses were not incurred for provision of output services. The expenses incurred in procuring insurance policy for the employees, officers and directors of the appellants were necessary in running the appellant's business; the Commissioner wrongly found that these were not input services as envisaged under Rule 2(l) of Cenvat Credit Rules (CCR). The Commissioner erroneously ignore....
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....er and employees would leave the assessee in the midst of the work and join those work places where the employees get benefits of such policies. Therefore, in absence of such policies, it would be next to impossible to carry out business functionalities without constant disturbances. Therefore, Group Medishield and Group Personal Accident Policy is an input service utilized in relation to the assessee's business and Cenvat credit is admissible on taxes paid on such services. D. Directors and Officers policy and Crime Insurance Policy Directors and Officers Liability Insurance provides financial protection for the directors and officers of the insured in the event they are used in conjunction with the performance of their duties as they relate to the company. Therefore, these insurance policies are also taken to carry out the business function of industry and would qualify as input services. Similarly, Crime Insurance Policy is for indemnifying the Company from any liability that may be imposed on directors and officers on account of any loss, theft or on account of any fraudulent acts committed by the employee or any other person causing financial hardship to the Company. Theref....
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....ervices and Cenvat credit is admissible on taxes paid on such services. The appellants had canvassed its entitlement of credit on input services availed explaining their nexus with output services as explained against each item. We find that dispute involved is the scope of input service. The input service is defined in Clause (l) of Rule 2 of the Cenvat Credit Rules, 2004, as follows :- "Input service means any service :- (i) Used by a provider of taxable service for providing an output service or (ii) used by the manufacturer, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credi....
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....t service figuring in Rule 2(l) of CCR was interpreted by the Tribunal in the following decisions holding the service(s) dealt with in each came under scope of the said expression :- Sl. No. Decision Input service 1. CCE, Mumbai-V v. M/s. GTC Industries Ltd. [2008-TIOL-1634-CESTAT-MUM-LB = 2008 (12) S.T.R. 468 (Tri.)] Outdoor caterer service 2. M/s. Finolex Cables Ltd. v. CCE, Pune-I, [2009-TIOL-122-CESTAT-MUM = 2009 (14) S.T.R. 303 (Tri.-Mumbai)] Insurance of plant and machinery 3. CCE, Nasik v. Cable Corporation of India Ltd. [2008-TIOL-1180-CESTAT-MUM = 2008 (12) S.T.R. 598 (Tri.-Mumbai)] Hiring of cars for transportation of employees 4. CCE & C, Aurangabad v. M/s. Endurance Systems India Pvt. Ltd. [2009-TIOL-210-CESTAT-MUM = 2009 (237) E.L.T. 204 (Tri.-Mumbai)] Group Mediclaim policy and Workmen's accident policy. 5. Ferromatik Milacron India Ltd. v. CCE, Ahmadabad [2009-TIOL-01-CESTAT-AHM = 2009 (15) S.T.R. 282 (Tri.)] Outdoor caterer 6. Milipore India Ltd. v. CCE, Bangalore [2009 (13) S.T.R. 616 (Tri. - Bang.) = 2009 (236) E.L.T.145 (Tri. - Bang.)] (1) Medical and personal accident policy (2) Group Personal accident policy (3) Insurance (4) Personal accid....
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.... is trained manpower such as qualified engineers. Appellants are also engaged in the activities related to creation of software. The assessee and their personnel are open to risk of allegations of infringing laws relating to patent or condition of contract with clients, etc. Therefore, the personnel/executives of the assessee have to be protected from such risk. Thus the various policies of insurance taken by the assessee in the name of its manpower are prima facie input service eligible for credit. 5. In GTC Industries Ltd. case (supra), the Tribunal found that the expenditure incurred for subsidized food for the personnel of the assessee formed part of the cost of the final products as per the standards for costing of the goods manufactured for captive consumption. Since the service tax relatable to outdoor catering was thus part of the taxable value of the final products, it was held that service tax paid for outdoor catering by the assessee was admissible as input service credit. As regards different types of insurance policies the appellant takes, to indemnify its personnel against risk they may incur to claims by clients, etc. in their day to-day work, these have to be ....