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2014 (7) TMI 485
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.... of the service tax paid on the various insurance services availed by them for insurance of plant and machinery, marine insurance, insurance of cash in transit, vehicle and laptop insurance as these services are not covered by the definition of 'input service', as given in Rule 2 (l) of the Cenvat Credit Rules, 2004. Based on this Audit objection, a show cause notice dated 30.01.2009 was issued to the appellant for recovery of allegedly wrongly availed cenvat credit amounting to Rs. 3,05,98,072/- in respect of insurance services during the period from October, 2004 to December, 2007 along with interest thereon under Section 11 AB of the Central Excise Act, 1944 and also for imposition of penalty on the appellant under Rule 15 of the Cenvat Credit Rules read with Section 11 AC of the Central Excise Act, 1944 and also under Rule 25 of the Central Excise Rules, 2002. This show cause notice was issued by invoking extended period under proviso to Section 11 A(1) of the Central Excise Act, 1944 by alleging that the appellant with intent to evade duty by wrongly availing cenvat credit, had concealed the facts of availment of cenvat credit in respect of insurance service from the d....
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....this had been so, the same would have been specified in the list of "activities relating to business", though other services have been listed therein. This finds support from the amendment made in the definition of 'input service' vide notification no.03/2011-CE (NT) dated 1.3.2011 with effect from 1.4.2011 by which the expression "activities relating to business" has been deleted. This amendment has to be treated as retrospective amendment, in view of the judgement of the Larger Bench of the Tribunal in the case of Vandana Globla Ltd. reported in 2010 (253) ELT 444 (Tribunal-LB), wherein the Tribunal while examining the scope of the amendment made in the definition of "input" by insertion of Explanation II to Rule 2 (K) of the Cenvat Credit Rules, 2004 vide notification no.16/2009-CE (NT) dated 7.7.2009, had observed that the amendment made under the notification dated 7.7.2009 was clarificatory in nature and the same would have been retrospective effect. (2) "Input Service" must have nexus with process of manufacture and for determining the eligibility of 'service' for cenvat credit, it must be shown that the service is used in or in relation t....
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....ible for cenvat credit in terms of the judgement of the Tribunal in the case of Idea Cellular Ltd. Vs. CCE, Meerut-I reported in 2011 (22) STR 450 (Tribunal-Delhi), that as regards Marine insurance/Transit insurance, in terms of the judgement of the Tribunal in the case of Monnet Ispat reported in 2010 (19) STR 417, the same is eligible for cenvat credit, that most of the judgements had been cited in course of proceedings before the Commissioner, but he has not considered the same and has confirmed the cenvat credit demand on the basis that the amendment to Rule 2 (1) w.e.f. 1.4.2011 by which the expression "activities relating to business" was deleted, is a retrospective amendment, that the reasons for treating this amendment as retrospective amendment as given by the Commissioner are absolutely incorrect, as just because the Larger Bench of Tribunal in the case Vandana Global Ltd. (supra) has held that amendment to Rule 2(K) of Cenvat Credit Rules, 2004 by adding Explanation II has to be treated as clarificatory in nature and would be applicable retrospectively, it cannot be concluded that the every amendment to Cenvat Credit Rules, 2004 is a retrospective amendment, that the fin....
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....service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto 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, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upon the place of removal; With effect from 1.4.2011, the definition of "input service" was amended and the amended definition is as under:- "2(1) "input service" means any service"- (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to 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 promoti....
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....ces, in question, do not have any nexus whatsoever with the manufacture of final product. (b) Though the term 'activities relating to business' has been deleted w.e.f. 1.4.2011, this amendment has to be treated as of clarificatory nature and accordingly, even for the period prior to 1.4.2011, the "activities relating to business" would not be covered by the definition of 'input services. 8.1 Coming first, to the finding of the Commissioner that a service for being cenvatable, must have been used in or in relation to the manufacture of final product and that insurance services having no nexus whatsoever with the manufacture of final product are not eligible for cenvat credit, we find that this finding of the Commissioner is contrary to the law laid down by the Hon'ble Bombay High Court in the case of CCE Vs. Ultra Tech Cement (supra), wherein the Hon'ble Bombay High Court while considering the eligibility of outdoor catering service for cenvat credit, has in para-28, 29 and 30 held that - (a) the definition of "input service" is very vide and covers not only the services which are used directly or indirectly in or in relat....
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....s judgement of the Hon'ble Bombay High Court the Commissioner's finding that an service for being cenvatable must be used in or in relation to the manufacture of final product whether directly or indirectly is not correct and any service having nexus with the business of manufacture which has been used by a manufacturer would qualify as an input service. Insurance of plant and machinery, goods in transit, cash in transit and insurance of vehicles, and laptop, is an integral part of manufacturing business, as no manufacturer would carry on manufacturing operations without insurance of plant & machinery, cash in transit, goods in transit, vehicles & computers, etc. against any loss due to accident, natural calamities, etc. In view of this, the services of plant and machinery, transit insurance of goods, insurance of cash in transit, laptop, etc. have to be treated as an activity related to the business and would be eligible for cenvat credit. 9. As regards, the Group Insurance of all Employees against sickness or accident, the same has been held as cenvatable by the judgements of Hon'ble Karnataka High Court in the cases of Stanzen Toyotetsu India (P) Ltd. (supra), Micro....