2018 (10) TMI 1252

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....nts have been availing Cenvat Credit of the Service Tax paid by them on the re-insurance policies taken by them for making a cover for the insurance contract entered by them as an output service provider. The department has entertained a view that the insurance and re-insurance are two separate contracts and same are independent of each other. It has further been contested by the department that since any particular contract cannot be assigned to any part of a particular right of liability which are already existing towards appellant under a contract for direct insurance and, therefore, the re-insurance did not appear to the department to be an essential input for providing insurance services and accordingly they entertained a view that the....

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....d Customs, Bangalore vide its Final Order No.20719/2014 dated 07.05.2014 has held that since the re-insurance is a statutory obligation and the re-insurance is co-terminus with the insurance policy itself. The Hon'ble Tribunal was of the view that the stand taken by the Revenue that the transfer of a portion of the risk to the re-insurer which is of the re-insurance means has to be considered as having an excess with the output service, namely, provision of the insurance to the customers. We take note of the fact that percentage of insurer to be re-insured is directly connected to the premium covered from the persons who are insured with the insurer and it is basically transfer of a portion of the risk and, therefore, it can definitely be s....

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....t so far as the availment of Cenvat Credit of the Service Tax paid by the appellant on the premium of the re-insurance taken by them for providing the insurance service to their customers, we find that the matter is no longer res integra as it has already been decided by this Tribunal and Hon'ble High Court of Karnataka in case of Commissioner of Service Tax, Bangalore Vs PNB Metlife Insurance Co. Ltd. [Civil Appeal No. 56/2014 dated 9.4.2015]. The relevant extract of the above judgement are reproduce below: "6. Having heard the ld counsel for the parties and in the face of this case, we are of the opinion that the order of the Tribunal does not require any interference. Rule 2(i) of the CENVAT Credit Rules, 2004 provides that 'Input Servi....

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.... in the facts of the present case, it cannot be said that the same could not be an 'Input Service' eligible for CENVAT credit within the meaning of Rule 2 (1)( of the CENVAT Credit Rules, 2004. 7. We may further add that the Service Tax is levied for certain service rendered and the provision of giving the CENVAT credit is so that there may not be double taxation. If a person has collected service tax, no doubt the same has to be despatched, but if in the process of the same transaction he has paid some service tax, which is necessary for its business, then he is entitled to the CENVAT credit to the extent of service tax which has been paid by it. In the present case, if the entire Service Tax which is collected by the Insurer, while sell....