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2015 (5) TMI 68
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.... the process of its business, the Insurer issues Insurance Policies on which Service Tax is charged from its customers (Insured). Section 101A of the Insurance Act 1938, requires every insurer to have a certain percentage of the insurance coverage given by the Insurer to be re-insured by another company. 2. In the present case, the respondent - Insurer had procured re-insurance service from over-seas Insurance companies and had availed CENVAT credit of Service Tax paid on such services received by it. The Commissioner of Central Excise (Adjudication), vide its order dated 2.12.2013, disallowed the CENVAT credit to the respondent -Insurer and held that Service Tax paid on re-insurance services received cannot be considered as Input Servic....
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.... the provider of taxable service should be providing an Output Service, whereas in the case of the respondent - Insurer the Input service alleged to be given is after the Insurance policy has been issued by the Insurer, and Service Tax has been collected. According to the appellant, it is only after the insurance policy is issued by the Insurer that the re-insurance is taken from another company, on which it pays Service Tax and as such it would not be entitled to CENVAT credit, as the same cannot be termed as 'Input Service' within the meaning of Rule 2(l)(i) of CENVAT Credit Rules, 2004. It is also contended that there is no justification for the essential or indispensable nature of input service (i.e., re-insurance service) for p....
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....e submission of the learned counsel for the appellant that once the Insurance Policy is issued by the Insurer, the transaction comes to an end (and would not depend on the re-insurance policy) and as such the service provided would not come within the ambit of input service, is not worthy of acceptance. The process of issuance of an Insurance Policy by the Insurer and subsequent procurement of re-insurance policy from another company (which is a statutory requirement) is an integral part of the total process. The process of insurance does not come to an end merely on the issuance of the Insurance Policy by the Insurer. In fact, it continues till the existence of the term of the policy. The re-insurance is taken by the Insurer immediately af....