AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (4) TMI 1066
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.... The Audit team verified the accounts of the appellant and based on their observations a Show Cause Notice was issued on the following grounds: Sl No. Issue Total Duty Amount involved (INR.) 1 Demand on account of Cenvat credit availed of service tax on input services used exclusively for providing exempted service (Commission paid for exempted policies) 237516319 2 Cenvat Credit availed for services provided in non-taxable territory (Jammu and Kashmir) 162259 Total : 237678578 2. After due process, the ld. adjudicating authority confirmed the demand along with interest and also imposed penalty on the appellant. Being aggrieved, the appellant is before the Tribunal. 3. The Ld. Counsel representing the appellant submits that in respect of the second issue in the above Table, it is on record that the appellant had reversed the CENVAT Credit of Rs.1,62,259/-, along with interest of Rs.79,864/- and intimated the Dept vide their letters dated 09.09.2013 and 14.01.2014. Therefore, it is submitted that without considering the reversal of CENVAT Credit along with interest, the Show Cause Notice was still issued, which was not required to be ....
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.... that the services are used exclusively for providing exempted services is incorrect. 4.6. The appellant further submits that Explanation II to Rule 6(3) of the CCR, which restricts the credit relating to services used exclusively for the provision of exempted supplies is incorrect since the said explanation is applicable only when there are multiple services and one of the services is exempt. 4.7. Reliance in this regard is placed by the appellant on the decision of the Hon'ble Tribunal in the case of M/s. Metlife India Insurance Company Limited Vs Commissioner of Central Excise, Bangalore 2020-Wl-380-CESTAT-BLR-ST wherein the Tribunal held as follows: "8. The issue that needs to be decided in the instant case is whether the appellant is eligible to avail CENVAT credit of service tax paid under reverse charge mechanism for availing services of insurance agents when portion of premium amount (consideration towards output service) is not liable to service tax. In the instant case, on perusal of the finding made by the Ld. Commissioner (in para 21 of the impugned order), we find that credit has been denied solely on the premise that the- insurance service (or sale ....
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...., there is no provision of completely exempt service and therefore, the demand confirmed is legally untenable 4.9. Further, the appellant submits that, without prejudice, the demand computed is incorrect since the same has been calculated merely basis the turnover of exempt supply shown in the ST-3 returns and without granting the benefit of reversal already undertaken by the Appellant. 4.10. In the present case, the demand has been calculated on the basis that the entire turnover is that of exempt services. However, the appellant points out that it is relevant to note that in certain policies such as policies sold to Government/Banks under specified schemes for General Public BPL, SEZ Units etc., there was no commission that was paid and thus, the question of reversal of credit in case of such policies does not arise. Sample copies of policies where there is no commission have been enclosed by the appellant in support. 4.11. Further, the appellant has submitted that while determining the duty liability, the reversal of INR 85.5 Crs has not been considered by the Department; hence, upon consideration of the reversal, question of demand does not arise at all. 4.12. Witho....
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....e failure on their part to discharge service tax. 4.16. Reliance is also placed by them on the decision in the case of Machintosh Burn Ltd. vs. Commissioner of Service Tax, Kolkata [2020 (35) G.S.T.L, 409 (Tri. Cal.)], wherein this Tribunal held that mens rea cannot be assumed in respect of PSUs. 5. The Ld. Authorized Representative appearing on behalf of the Revenue, relies on the detailed findings of the ld. adjudicating authority, and submits that the appellant have availed the services of the Insurance Agents, who were providing exempted services. He contends that this would fall under the exclusion clause of the CENVAT Credit; by taking the CENVAT Credit, the appellant have been rendered liable to pay the Service Tax as per the confirmed demand. In respect of the services rendered at Jammu and Kashmir, he submits that knowing fully well that the Service Tax is fully exempt for those transactions, still the appellant has availed the CENVAT Credit for the input services. Thus, he justifies the confirmed demand. 6. Heard both sides, perused the Appeal papers and other submissions made before us. 7. In respect of the demand of Rs.1,62,259/-, it is clear from the availa....
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....It would be important to go through the Rule 6 and Rule 2 of the CENVAT Credit Rules 2004 (as they existed during the relevant period), which are reproduced below: Rule 6(1): " Rule 6 (1) The CENVAT credit shall not be allowed on such quantity of input used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service used in or in relation to manufacture of exempted goods and their clearance up lo the place of removal or for provision of exempted services, except in the circumstances mentioned in sub- rule (2) (3) Notwithstanding anything contained in sub-rule (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow anyone of the following options as applicable to him namely: (i) pay an amount equal to six percent of value of the exempted goods and exempted services; (ii) or pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided in clause (a) of sub-rule (2), take CENVAT credit only on inputs under sub-clauses (ii) a....
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....Without any dispute, the appellant himself has admitted that they are rendering both taxable and exempt services. Since they are not in a position to bifurcate the input services used for such services, they take the CENVAT Credit for the all the input services invoices and they are reversing the CENVAT by paying the Service Tax of 6% / 8% in terms of Rule 6(3) (i) of the CENVAT Credit Rules 2004. As can be seen from their submissions, during the period 2008 to 2013, they have paid Rs.85.5 crores under this category. This fact has been completely ignored by the Adjudicating authority. 12. To summarize : - (a) In respect of common input services, the appellants have been regularly reversing the CENVAT Credit in terms of Rule 6(3)(i) of CCR 2004. (b) The Department has not brought in any evidence to the effect that the appellant has taken CENVAT Credit in respect of any input service which is exclusively used in the provision of exempted services. (c) The documentary evidence brought in by the appellant shows that the Insurance Agent is authorized to take up both the taxable and exempted insurance services. 13. Therefore, we find that the confirmed de....
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.... === = f: 08/12/2010 # 07/12/2013 4: fary Att arfitach ar art wet & fax orfuga ? HtxIn, pand the prescribed fee and having made the necessary declaration is hereby authorized to act an insurance agent prae 08 12/2010 se 07/12/2013 for procuring or soliciting insurance business of one Both Life & General Insurer. PTil Place Hyderabad 27 Dar 09 01 2012 कृते बीमा विनियामक और विकास पà¥à¤°à¤¾à¤§à¤¿à¤•à¤°à¤£ for Insurance Regulatory and Development Authority = x 3rtxIts Chairperson × 177-2 = KEER Signature of Licence Helder affiffar zaffa Authorised Officer à¤à¤® अनà¥à¤¬à¤‚धित तब तक विधिमानà¥à¤¯ नहीं होगी जब तक विनियामक और विकास पà¥à¤°à¤¾à¤§à¤¿à¤•à¤°à¤£ के हसà¥à¤¤à¤¾à¤•à¥à¤·à¤° क....