TaxTMI 
TaxTMI 
2023 (7) TMI 261
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....at credit under Rule 6(3) of Cenvat Credit Rules, 2004 (Rs.1,18,66,102/-). (iii) Non-payment of Service Tax under RCM on legal charges (Rs.35,203/-). 1.1 The said aforesaid amounts were accordingly prayed to be recovered from the appellant along with the proportionate interest and the appropriate penalties under Section 76, 77 and 78 of the Finance Act, 1994. The said proposal was initially confirmed vide Order-in-Original No. 15/2020 dated 09.03.2021. Being aggrieved the appellant is before this Tribunal. 2. We have heard Shri Pawan Arora and Ms. Akanksha Kumari, learned Advocates for the appellant and Shri Harshvardhan, learned Authorized Representative for the department. 3. Learned counsel for the appellant has mentioned that the availment of Cenvat credit on employee insurance has been denied based on exclusion clause of the definition of input services in Cenvat Credit Rules, 2004 (hereinafter referred as CCR, 2004). It is impressed upon that the exclusion of certain services from input services is only when such services are purely for personal use or consumption of any employee. The decision of M/s. Rajratan Global Wire Ltd. Vs. Commissioner, Central Goods....
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....eal No. 689 of 2012, it is mentioned that, hence, there is no infirmity as far as the non-reversal of Cenvat credit under Rule 6(3) of CCR, 2004 has been ordered. The order of imposition of penalty due to non-payment of service tax under Reverse Charge Mechanism on legal charges is also impressed as correct. The appeal in question is accordingly prayed to be decided in favour of Revenue at least for the two counts as mentioned above. 5. Having heard the rival contentions and perusing the records. We observe and hold as follows: 6. The three issues as were raised after the audit of the appellant are as follows: (i) Cenvat credit availed by the company on Group Personal Accident Policy, Group Term Life Policy and Group Mediclaim Policy taken for employees. (ii) Method/option of Cenvat credit reversal under Rule 6 of Cenvat Credit Rules pertaining to non-taxable service provided by the appellant in the state of Jammu & Kashmir. (iii) Penalty on tax liability discharged under reverse charge on legal services. 7. As far as the first noticed shortcoming is concerned, we observe that the adjudicating authority has held that the Cenvat credit availed by ....
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.... (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee; [Explanation. - For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.] 8. The bare perusal of this definition as reproduced above shows that it would mean any service used by the manufacturer/the service provider whether directly or indirectly, in or in relation to the manufacture of final product and include services used in relation to the activities relating to business or capital goods. That apart, the definition of input services is too broad. It is inclusive also in definition what is contained in the definition is only illustrative in nature. However, holding that the activities relation to business and any services rendered in connection therewith would form the part of input services. The Hon'ble Hi....
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.... of Karnataka in the case of Commissioner of C.Ex. Bangalore-II Vs. Millipore India Pvt. Ltd. reported as 2012 (26) S.T.R. 514 (Kar.) was relied upon, wherein it was held that all factors have to be taken into consideration while fixing the cost of final product. It was observed as an undisputed fact in the said case that the premium so paid has formed part of the cost of excisable goods on which the excise duty has been paid on removal. Therefore, the assessee is entitled to avail Cenvat credit for the insurance premium paid in respect of the group insurance/insurance of employees including retired employees/mediclaim as these are covered under the definition of input services having nexus to the business of the assessee. The Hon'ble Bombay High Court reiterated this decision subsequently in the case of Commissioner of C. Ex., Nagpur Vs. Ultratech Cement Ltd. reported as 2010 (20) S.T.R. 577 (Bom.). All these decisions have been considered by the Larger Bench of this Tribunal while deciding the case of Reliance Industries Ltd. Vs. Commr. of C. Ex. & S.T. (LTU), Mumbai reported as 2022 (60) G.S.T.L. 442 (Tri.-LB), wherein it was held as follows: "34. It needs be noted here....
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....part of the cost of production/value of the final product on which duty of the excise is levied. In this view of the matter, the appellant would be entitled to avail Cenvat credit on the service tax paid on insurance premium for employees who had opted for the 'Voluntary Separation Scheme. The interpretation of Rule 2(l) of the 2004 Rules has been conclusively settled by the Hon'ble Bombay High Court in Coca Cola India and Ultratech Cement (supra).It has also been consistently so held in Principal Commissioner Vs. Essar Oil Ltd. reported as 2016 (41) S.T.R. 389 (Guj.), Commr. of S.T., Mumbai-II Vs. Willis Processing Services (India) Pvt. Ltd. reported as 2017 (7) G.S.T.L. 12 (Bom.) and Commr. of C. Ex. & Service Tax Vs. Tata Consultancy Services Ltd. reported as 2018 (362) E.L.T. 777 (Bom.). 11. This Tribunal also in the case of M/s. Rajratan Global Wire Ltd. (supra)has held that once there is no evidence that the insurance service was obtained for the personal use of the employee of assessee, it is definitely an eligible input service for which the assessee is entitled to claim the Cenvat credit. Above all, department has conceded for this issue to no more res integra and to ha....
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.... further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be six per cent of the value so exempted. Provided also that in case of transportation of goods or passengers by rail the amount required to be paid under clause (i) shall be an amount equal to 2 per cent of value of the exempted services. Explanation 1. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. 13. We observe, from the bare perusal, that for the said proportionate reversal of Cenvat credit, Rule 6(3) provides either of the following options to a provider of output service that he shall either: (a) Pay an amount of equal to 5 per cent of the value of exempted service or pay an amount equal to proportionate turnover of the exe....
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....f clause (c) read with clause (h) and have deposited the amount so determined, by 30th June in the succeeding financial year as prescribed. We draw our support from the decision in the case of M/s. Tata Technologies Ltd. Vs. Commissioner of Central Excise, Pune-I reported as 2016- TIOL-272- CESTAT-MUM. 15. We are also of the opinion that Rule 6 cannot be used as tool of oppression to extract the amount which is much beyond the remedial measure and what cannot be collected directly and cannot be collected indirectly, as well. Accordingly, we hold that in case of substantive compliance made by the assessee i.e. calculation of the amount of Cenvat credit proportionate reversal on annual basis and payment of the amount before the prescribed date, substantial benefit cannot be denied as it tantamount to not availing of input service credit on common inputs which are going into exempted services. We rely upon the decision of Hon'ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. Vs. Collector of C. Excise, Nagpur reported as 1996 (81) E.L.T 3 (SC). In light of the above discussion, we hold that reversal of Cenvat credit on common input services has wrongly been ordered ....