TaxTMI 
TaxTMI 
2026 (9) TMI 1374
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....vices were disputed by the Department on the ground that these services were not categorized as 'input service', in terms of the definition provided under Rule 2(l) of CENVAT Credit Rules, 2004. Such allegation of non-eligibility for availing the CENVAT credit was initially raised by the audit wing of the Department. On the basis of audit report, proceedings were initiated against the appellants vide Show Cause Notices (SCN) dated 11.01.2018 and 15.05.2018, which culminated into the adjudication order dated 18.12.2018, wherein the original authority had adjudicated both the SCNs issued against the appellants and confirmed the proposals made therein. On appeal against the said adjudication order dated 18.12.2018, the learned Commissioner (Appeals), GST and Central Excise, Appeals-Thane, has upheld confirmation of the adjudged demands, except reducing the quantum of penalty to 10% of the CENVAT demand confirmed on the appellants in the original order. Feeling aggrieved with the impugned order dated 25.06.2019, the appellants have preferred this appeal before the Tribunal. 2. Learned Advocate appearing for the appellants submitted that the disputed services on which the appellants ....
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.... benefit of CENVAT credit should be available to them. On imposition of penalty on the appellants, she has pleaded that since there is no element of mens rea in availment of CENVAT credit, the penal provisions contained in Rule 15 of the Rules of 2004 read with Section 11AC of the Central Excise Act, 1944 cannot be made applicable to them. 3. On the other hand, learned Authorized Representative appearing for Revenue, reiterated the findings recorded in the impugned order and further submitted that Staff Welfare expenses incurred for providing the services of canteen facilities and transportation of workers to the factory, should not fall under the ambit of 'input service', for the purpose of availment of CENVAT credit. In this context, he has relied upon the judgment of the Hon'ble High Court of Karnataka, in the case of Toyota Kirloskar Motor Pvt. Ltd. vs. Commissioner of Central Tax, Bangalore [2021 (50) GSTL 286 (Kar.)], which was subsequently upheld by the Hon'ble Supreme Court reported in [2021 (55) GSTL 129 (S.C.)]. 4. Heard both sides and examined the case records. 5. The phrase 'input service' has been defined under Rule 2(l) of the Rules of 2004, which rea....
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....nd 2(l) ibid respectively. The dispute involved in the present appeal relates to consideration of the issue whether, the disputed services qualify to be considered as 'input service' in terms of the definition under Rule 2(l) ibid for availing CENVAT credit of service tax paid thereon. On reading of the said definition clause, it transpires that the legislature has divided the eligible services into three parts viz., (i) the 'main part', under which the services used by a manufacturer, whether directly or indirectly, in or in relation to manufacture of final products and clearance of final products upto the place of removal, are specified; (ii) Under the 'inclusive part', even though certain services are not useable as per (i) above, but those would still be considered as input service on account of specific inclusion, and the scope of such inclusion is wider in nature. (iii) Certain excluded category of services was carved out under this segment, to straight away disqualify such specified services from the scope and ambit of consideration as 'input service'. 7.1 The inclusive part of the definition of 'input service' cover the services of 'advertiseme....
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....tion charges have been included in the value of goods/raw materials for accounting purpose, the same should qualify for consideration as 'input service' under the main part of the definition. 7.3 With regard to insurance policies obtained by the appellants, it has been submitted that those policies were taken for insuring the plant & machinery installed at the factory premises, stock of goods available at the godowns/ware-houses and in transit. It was specifically denied by the appellants that they had not used/ utilized the insurance service by paying premium for the benefit of the employees. Such submission made by the appellant is duly fortified with the certificate dated 12.05.2026 issued by the practicing Chartered Accountant firm, certifying that the appellants had paid the insurance premium for insuring their various assets from peril of theft, fire, burglary etc. Since the insurance premiums were paid by the appellants not for the benefit of the employees, it cannot be said that such insurance service is falling under the exclusive part of the definition of input service. 7.4 The appellants have accepted the fact that on the 'rent-a-cab' service, they should not be el....